Taiwan’s purchasing managers index (PMI) showed signs of expansion last month, reversing three consecutive months of decline, as the volume of new orders picked up modestly, a report by HSBC PLC showed yesterday.
The PMI, a leading indicator to gauge the health of the manufacturing sector, climbed to 51.l7 last month, from 48.6 in October, signaling a strengthening manufacturing sector in Taiwan, although the pace of expansion remains weak, the report said.
“November’s PMI result lays to rest fears that the rebound in the performance of Taiwan’s manufacturing sector is about to plummet back into deep negative territory,” said Donna Kwok (郭浩庄), an economist for HSBC in Asia. “The manufacturing sector is finding its feet again after a prolonged summer lull in Western demand.”
The rebound helps keep the nation’s domestic-demand recovery on track, although the global outlook remains far from clear, she added.
A PMI reading above 50 means the industry is expanding, while a score below the neutral level indicates deterioration. The measure is important for Taiwan because the nation is a heavy exporter of consumer electronics, including semiconductors, flat panels and personal computers.
New orders received by Taiwanese manufacturers from overseas markets expanded last month as ongoing improvements in global economic conditions boosted demand, particularly in Europe, the HSBC report said.
Taiwanese manufacturers also reported a reduction of finished-goods inventories last month, with the latest decrease sharper than in the previous survey, the report said. This marked the second successive month in which post-production inventories declined.
However, the decrease in finished goods remained modest, suggesting no pressing need for -aggressive inventory buildup among manufacturers.
Meanwhile, firms reported a rise in staffing levels last month, in a bid to expand production capacity amid growing business, the report said.
However, inflationary pressure continued to build up as last month’s data signaled a considerable rise in input prices, the report said. Higher raw material prices, a short supply of certain items and unfavorable foreign exchange rate fluctuations all contributed to the latest increase in costs, the report said.
The New Taiwan dollar gained 3.90 percent against the US dollar from September to last month, as hot money flowed into Asian markets on expectations of a weak US dollar.
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