PMI indicates economic upturn: report

POSITIVE SIGNS::Reflecting an increase in demand from the US and China, local manufacturing showed encouraging signs of recovery as last year drew to a close

By Amy Su  /  Staff reporter

Sat, Jan 05, 2013 - Page 13

Taiwan’s official purchasing managers’ index (PMI) jumped to 51.3 last month, from 49.6 in November, providing more evidence of a gradual increase in the momentum of a recovering economy, a report by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

It has been the first time the composite PMI rose over 50 since June last year, when the Taipei-based think tank released its second pilot report.

A PMI reading above 50 indicates expansion, while a reading below 50 signifies a contraction.

On Monday, HSBC said in a report that the nation’s manufacturing PMI returned to expansion last month, rising to an eight-month high of 50.6 last month from 47.4 in November. The British banking group said the data ended six straight months of declines on improved demand from the US and China.

“The results showed that economic sentiment has been on an upturn trend and led us to maintain a cautiously optimistic outlook for the economy in the first quarter,” CIER president Wu Chung-shu (吳中書) told a press conference.

The CIER’s PMI — a leading indicator of the economic outlook in the next three to six months — consists of five sub-indices: new orders, production, employment, inventories and supplier deliveries.

The new orders sub-index surged to 52.6 points last month from 52.4 in November, the second consecutive month it stayed above the 50-point threshold.

Meanwhile, the production sub-index rose for the second month in a row, increasing 3.7 points from November to 54.8 last month, with the employment sub-index also climbing to 53.3 last month, from 49.9 recorded a month earlier, the report said.

However, supplier deliveries and inventories remained under the 50-point threshold last month, standing at 48.2 points and 47.8 points respectively, the report’s data showed.

The composite PMI reading for four of Taiwan’s six major industries — the chemical, bio-technology and medical sector, the basic raw material sector, the transportation sector, and the electrical and mechanical sector — all stood above 50 points last month, indicating expansion.

The electronics and optical sector marked the only industry signifying contraction in PMI last month, with the food and textile sector staying flat at 50 points, statistics showed.

Supply Management Institute in Taiwan (SMIT, 中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said the PMI reading for the electronics sector may start to move upward after March, as its peak period for production draws closer.

The end of the peak period for the electronics and optical industries was also the major factor slowing the rising pace of new orders last month, Lai added.

Commissioned by the Council for Economic Planning and Development, the CIER started working on the PMI at the end of 2011 in collaboration with the SMIT.

Last month’s survey polled purchasing managers at about 230 companies in the manufacturing sector.