PMI posts third straight decline: CIER

By Amy Su  /  Staff reporter

Wed, Jul 03, 2013 - Page 13

The Chung-Hua Institution for Economic Research’s (CIER) manufacturing purchasing managers’ index (PMI) last month fell for the third consecutive month, dropping 1.7 points from May to 53.6, as various global and domestic uncertainties slowed the expansion of the local economy.

However, the 53.6 points recorded last month were still higher than the 50-point threshold of growth, indicating the manufacturing sector is still expanding, albeit at a slower pace, the institute added.

The results showed some differences from HSBC Holdings PLC’s Taiwan Purchasing Managers’ Index (PMI), which posted a reading of 49.5 last month, up from 47.1 in May, indicating that the business climate is deteriorating marginally, but that the pace of decline is slowing.

“Under the current global economic conditions, Taiwan may see its economy grow by between 2 percent and 3 percent this year,” CIER president Wu Chung-shu (吳中書) told a press conference.

Economic sentiment in Europe has been gradually recovering, with the US economy expected to show some volatility, Wu said, adding that GDP growth in China may slow further this year.

Wu said that uncertainties about the global economic outlook raised the uncertainties in evaluating current economic condition in Taiwan.

However, the decline of the PMI reading in China last month indicated that demand from China has slowed, which may further affect Taiwan’s manufacturing sector, Wu added.

The official PMI in China slipped to 50.1 last month from May’s 50.8, just slightly above the 50-point level that indicates growth.

The PMI data produced by the Taipei-based think tank — a leading indicator of the economic outlook for the next three to six months — is comprised of five sub-indices: new orders, production, employment, inventories and supplier deliveries.

The sub-index of employment was the only indicator to show a month-on-month increase last month, after it rose 2.4 points to 56.6, the CIER said in its monthly report.

The new orders sub-index declined by 4.1 points month-on-month to 51.4 last month, its lowest level since October last year, while the production sub-index fell to 55.5, down 0.8 points from a month earlier, the report said.

The supplier deliveries sub-index shrank by 4.8 points from May to 50.1 last month, with the inventories sub-index down 1.4 points to 54.3 in the same period, the data showed.

Differentiated by industry, the sub-index for the food and textile industry rose to 57 points last month, from 55.6 points in May, signifying that the food sector has gradually recovered from the impact of food safety concerns, the data indicated.