The nation’s official purchasing managers’ index (PMI) climbed to 62.4 last month, from the 50 recorded in February, as local firms’ new orders and production posted seasonal growth after the Lunar New Year holiday, a report by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday showed.
A PMI reading above 50 indicates expansion, while a reading below 50 signifies a contraction. The Taipei-based institute’s index is a leading indicator of the economic outlook for the next three to six months and is comprised of five sub-indices: new orders, production, employment, inventories and supplier deliveries.
The rise in CIER’s PMI was in line with data from HSBC’s manufacturing purchasing managers’ index for Taiwan released on Monday, which showed that the British bank’s index rose to 51.2 last month from 50.2 a month earlier.
“The PMI readings over the past few months indicate a mild recovery [in the nation’s economy],” CIER president Wu Chung-shu (吳中書) told a press conference.
The national PMI has shown increased volatility over the past few months due to seasonal distortion caused by the Lunar New Year holiday, resulting in a drop in February’s reading from a month earlier, but a significant month-on-month increase last month.
In addition, if the seasonal factor is excluded, the PMI has shown an upturn trend over the past few months, as economic sentiment rebounds mildly, Wu said.
Despite feeling confident that the PMI would stay above the 50-point threshold of expansion this month, Wu said the reading may not reach 60 points as the seasonal period ends. Furthermore, destabilizing issues in the energy and housing markets, as well as the eurozone’s ongoing debt crisis, still pose uncertainties for the nation’s PMI over the near future, Wu added.
The PMI’s production sub-index climbed 28.9 points to 73.7 last month from February, the largest increase among the five sectors, as the fewer number of working days in February dragged down the comparison basis and helped accelerate the pace of expansion.
The new orders sub-index also surged 15.1 points to 69.6 last month from a month earlier, its fifth straight month of expansion, the think tank said in its report.
Meanwhile, the three other sub-indices — inventories, supplier deliveries and employment — all stayed within the expansion zone, the report showed.