The nation’s official purchasing managers’ index (PMI) dropped sharply to 50 last month, from 57.7 in January, as fewer working days due to the Lunar New Year holiday dragged down growth momentum in production and inventories, a report by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
A PMI reading above 50 indicates expansion, while a reading below 50 signifies a contraction. The 50-point level recorded last month indicated a “flat” scenario.
“The significant decrease [in the PMI last month] was mainly caused by seasonal factors,” CIER president Wu Chung-shu (吳中書) told a press conference.
However, following the end of seasonal factors, the PMI has a great chance rebounding this month, as evidenced by the upturn seen in the latest data on export orders and industrial productivity, Wu added.
The sub-index of business sentiment over the next six months stood at 67.7 last month, from 61.4 recorded in January, also in line with Wu’s views.
The official PMI conducted by the Taipei-based think tank — a leading indicator of the economic outlook for the next three to six months — consists of five sub-indices: new orders, production, employment, inventories and supplier deliveries.
Most manufacturers took days off during the nine-day Lunar New Year holiday last month, causing all five sub-indices to trend down last month from January.
The production sub-index shrank 17.8 points to 44.8 last month from January, while the inventories sub-index fell to 49.2, down 3.8 points from a month earlier, CIER said in its monthly report.
The sub-index of supplier deliveries declined to 50 last month, from 51.5 in January, to remain flat, the report said.
However, new orders and employment remained above the 50-point threshold last month, standing at 54.5 points and 51.6 points respectively, the report showed.