Fri, Jan 03, 2020 - Page 12 News List

Manufacturing PMI picks up: CIER

OUTLOOK UPBEAT:Companies have turned optimistic about their business prospects for the first time since July last year, the Taipei-based think tank said

By Crystal Hsu  /  Staff reporter

The official manufacturing purchasing managers’ index (PMI) last month climbed to 56.2, the fastest expansion in 19 months, as local companies benefited from 5G deployment and inventory demand for electronics ahead of the Lunar New Year holiday, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

Companies turned upbeat about their prospects for the first time since July last year, with the possibility of a US-China phase one deal on Jan. 15 contributing to the optimism, the Taipei-based think tank said.

The PMI value — the result of a monthly survey intended to gauge the health of the nation’s manufacturing sectors — indicated an upturn in operating conditions for a third consecutive month.

Scores higher than 50 indicate an expansion, while those below the threshold suggest a contraction.

“An increase in demand for semiconductor equipment fueled the pickup and inventory demand ahead of the Lunar New Year holiday also contributed,” CIER president Chen Shi-kuan (陳思寬) told a media briefing in Taipei.

Chinese technology brands are rolling out 5G smartphones in an effort to increase sales over the Lunar New Year holiday this month.

All sectors reported business improvement with the exception of companies that supply electrical and machinery equipment, the monthly survey showed, meaning that companies selling chemical, plastic and basic materials also emerged from a protracted slowdown.

The sub-index on overall new business orders added 0.5 points to 61.5, while new export orders posted a concrete gain of 5.5 points to 55.8, CIER said, adding that the reading on industrial production reached an impressive 59.9, although easing from 60.4 a month earlier.

Manufacturers kept high headcounts last month, with the employment sub-index at 55, down from 55.6 in November, the survey showed.

Most companies have a positive business outlook moving forward, with the six-month outlook adding 8.4 points to 57.4 — pushing above 50 for the first time since July last year, CIER said.

Chen said that he attributed the rise in sentiment to reports that Washington and Beijing aim to sign a trade deal on Jan. 15 and organize further negotiations afterward.

Steve Lai (賴樹鑫), executive director at Supply Management Institute in Taiwan (中華採購與供應管理協會), said that 5G deployment would bring new consumer experiences and lend support to companies that are tapping related businesses.

The non-manufacturing index (NMI) was 54.1 from 55 in November, reflecting vibrant operating conditions for service-oriented firms for the 10th month in a row.

All sectors had an increase in business except for restaurants and hotels, the NMI report said.

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