Manufacturing PMI expands for 23rd consecutive month

By Crystal Hsu  /  Staff reporter

Fri, Feb 02, 2018 - Page 12

The nation’s official manufacturing purchasing managers’ index (PMI) last month climbed to 59 from 58 the previous month, as demand for all product categories picked up amid a stable global economy, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

The economic gauge, which aims to capture the pulse of the local manufacturing industry, has expanded for 23 consecutive months without signs of a slowdown, thanks to a healthy economy at home and abroad, the Taipei-based institute said.

“Local manufacturing firms in all sectors saw a strong start to the year and are upbeat about their business outlook in the coming six months,” CIER president Wu Chung-shu (吳中書) told a news conference.

Scores greater than 50 indicate business expansion, while values below the neutral threshold suggest a decline.

The new orders subindex rose to 60.9, while the industrial output read 61.2, the monthly CIER report showed, as domestic and foreign clients stepped up purchasing activity.

The expansionary cycle has proved resilient and stable compared with previous years, Wu said, adding that he has yet to spot major downside risks that might disrupt growth.

The Nikkei Taiwan manufacturing purchasing managers’ index shared the rosy view with a reading of 56.9, the highest since April 2011, a separate report by the Japanese news organization compiled by IHS Markit Ltd showed.

IHS Markit chief economist Annabel Fiddes attributed the business improvement to strong global demand.

The industry looks well-placed to continue the current course of growth, which explains why local firms hired more workers and expanded production capacity, Fiddes said.

A key factor that could dampen performance is access to inputs, given the increase in average delivery times for purchased items, she said.

Both reports observed sharp spikes in raw material costs, with the raw material prices subindex soaring to 79.2 in the CIER survey.

Factory gate charges gained at the steepest rate in 81 months, the Nikkei report said.

Companies in all manufacturing sectors expect the positive cycle to be sustained over the coming six months, CIER said.

Strong exports helped bolster business for local firms in nonmanufacturing sectors, with the Nikkei index reading 55.9 last month, up from 53.3 one month earlier, it said.

All service-oriented sectors reported business improvement last month, but restaurant and hotel operators had a dim view going forward, Wu said.

Hospitality providers generally see a seasonal business decline after the Lunar New Year holiday, which runs from Feb. 15 to Feb. 20 this year.