The manufacturing purchasing managers’ index (PMI) last month rebounded mildly, but remained in contraction mode for the fifth consecutive month, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The manufacturing PMI, which has remained below 50 since November last year, rose to 48.8 last month from 48.3 in February, CIER data showed.
The sub-indices for production and inventories rose to their highest level in five months, the data showed.
However, new orders, a leading sub-index that signals future activity, continued to decline, falling from 46.9 a month earlier to 46.3, its lowest level since December last year, when it was 42.6, the data showed.
The PMI is an indicator of manufacturing performance derived from production, new orders, employment, suppliers’ deliveries and inventories, based on a monthly survey of senior managers at about 300 local firms, CIER said.
A number higher than 50 indicates expansion and scores below the threshold suggest a decline.
Compared with its plunge from 56.1 in June last year to 44.8 in December, the PMI has been improving moderately, although it is still in contraction mode, Academia Sinica Institute of Economics director Kamhon Kan (簡錦漢) told a news conference in Taipei.
“However, we cannot confirm that the nation’s economy has passed a trough, as the manufacturing PMI usually rebounds after the Lunar New Year holiday in February, with some factories speeding up production after the holiday,” Kan said.
“We still need a few months to see if the index will continue to go up, even back to expansion mode, so we can judge whether the economy has recovered,” Kan added.
Given that local companies tend to adjust their inventories after the holiday, the increase in inventories for last month imply that businesses are more upbeat for the rest of the year, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.
Although the new-orders index has been declining since June last year, its pace of decline has slowed and it has a better chance of improving in the next few months, CIER said.
The manufacturing sector has a more optimistic outlook for the economy than before, even though the PMI has not returned expansion mode, it said.
Therefore, the institute expects the PMI to jump to 52.1 in the next six months amid easing concerns over the US-China trade spat, along with new business activities and applications, Lai said.
Among the six major industries in the local PMI, only the sub-index for transportation declined, last month, while chemicals and biotech; electronics and optoelectronics; electricity and machinery; food and textiles; and infrastructure and raw materials expanded, CIER data showed.
The non-manufacturing PMI — a gauge of services and construction — rose from 47.8 in February to 53.3 last month, the data showed.
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