Manufacturing activity last month improved slightly, but remained in contraction mode for the fourth consecutive month, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said.
Amid eased concerns over trade tensions between the US and China, the local manufacturing sector appeared relieved, and pushed up its business activity last month, the institute said on Friday.
CIER’s manufacturing purchasing managers’ index (PMI) staged a mild rebound, up 0.4 from a month earlier to 48.3, it said.
The PMI is an indicator of manufacturing performance derived from output, new orders, employment, suppliers’ deliveries and inventories. A number higher than 50 indicates expansion and scores below the threshold suggest a decline.
Bucking the upturn, the non-manufacturing index (NMI) for the local services sector fell by 1.2 points from the previous month to 47.8, marking the second consecutive monthly decline, the institute said.
The Nikkei Taiwan manufacturing PMI report, released on Monday last week, reached different conclusions, saying that operating conditions for local manufacturers deteriorated further due to weak demand across key export markets.
The Nikkei PMI fell to 46.3 last month, from 47.5 in January, staying in contraction mode for the fifth consecutive month.
As trade talks between Washington and Beijing continue, there is hope that the world’s two top economies could resolve their trade issues soon, CIER president Chen Shi-kuan (陳思寬) said, adding that is why many local manufacturers appeared more willing to plan ahead.
However, despite the rebound, it is too early to say whether the local manufacturing sector has bottomed out, Chen said.
Out of the five sub-indices in the PMI, only the output indicator moved lower, down 2.9 points from January to 46.2 and remaining in contraction mode, CIER said.
The sub-indices of new orders, employment, suppliers’ deliveries and inventories rose by 0.3, 1.1, 1.8 and 2.1 points respectively to 46.9, 50.4, 48.1 and 50.1, but only employment and inventories were in expansion mode, the institute said.
Among the six major industries in the local PMI, only the sub-index for the chemicals/biotech industries moved higher, while the sub-indices for electricity/machinery, food/textile, electronics/optoelectronics and basic raw materials moved higher, CIER said.
The sub-index for transportation remained unchanged, it added.
A contraction in services largely reflected the reduced number of working days last month due to the nine-day Lunar New Year holiday, Chen said.
Of the four major sub-indices in the NMI, only employment moved higher, by 4.7 points to 55.0, indicating expansion, the institute said.
However, the sub-indices on business activity/production, new orders and suppliers’ deliveries moved lower by 6.7, 0.4 and 2.4 points respectively to 40.8, 45.6 and 49.7, and all of them were in contraction, it added.
Additional reporting by Crystal Hsu
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