Wed, Jul 04, 2018 - Page 12 News List

New business and industrial output boosts PMI

EXPORT-FOCUSED:Access to inputs remains a key concern for industry, with reports of shortages stretching delivery times and enabling vendors to raise prices, an economist said

By Crystal Hsu  /  Staff reporter

The manufacturing purchasing managers’ index (PMI) last month reached 58.3 points, as local firms reported a hardy pickup in new business and industrial output ahead of the peak sales season for technology products, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

It was the 27th consecutive month that the economic bellwether expanded and most firms expect the uptrend to continue for the rest of the year, CIER president Wu Chung-shu (吳中書) said.

“Firms are generally upbeat about their operations, profitability and employment levels moving forward, suggesting continued improvement for the nation’s export-focused economy,” Wu told a media briefing.

The economic barometer gauges the health of the manufacturing industry, with scores above 50 indicating an expansion and those below indicating a contraction.

All major sectors last month reported business improvement, the report showed.

The critical sub-index of new business rose from 56.2 points to 61 points, while the reading on industrial output climbed from 59.6 points to 61 points, it said, although some firms involved in supplying biotechnology, chemical and transportation equipment products fared worse.

Taiwanese firms could benefit from order transfers in the short term as trade rows between the US and China pan out, Wu said, adding that escalating disputes would hurt global economic growth.

Thus far, the effect is not evident either way, the academic said.

The current quarter is the peak sales season for firms in the supply chains of global smartphone and personal computer brands, which are about to launch their latest generation of devices, Wu said, adding that rosy sentiment across the board explains why the six-month business outlook last month held high at 60.8 points.

The increase in the delivery time of suppliers from 59.2 points to 60.2 points would lend strength to healthy factory activity, he said.

The private Nikkei Taiwan Manufacturing PMI reached a similar conclusion with a value of 54.5 points.

Annabel Fiddes, chief economist at IHS Markit, which compiles the survey, said that the access to inputs remains a key concern for industry, with widespread reports of stock shortages stretching delivery times.

Growing input demand also enabled vendors to raise prices and pushed inflationary pressures close to a seven-year high, Fiddes said.

The non-manufacturing index improved, a separate CIER report said.

The gauge last month rose to 54.7 points, but restaurant and hotel operators failed to share the optimism for fear that pension reform would prompt retired civil servants, military personnel and public-school teachers to cut travel spending, Wu said.

Reforms went into effect this month in a bid to keep the pension program from going bankrupt.

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