The HSBC manufacturing purchasing managers’ index (PMI) for Taiwan rose above the neutral mark for the first time in nine months to 52.7 last month, thanks to stabilizing demand and restocking activity, a report by the banking group showed yesterday.
All but one sub-indices moved out of contraction last month, suggesting industrial production should hold up for another month, although concerns remain over international uncertainties, the monthly report said.
“Taiwan is fending off the impact of faltering European demand better than expected,” HSBC economist Donna Kwok (郭浩庄) said in the report.
With a still fragile recovery in the US and China, risks to growth remain tilted to the downside, she added.
A PMI value above 50 indicates expansion, while a lower reading suggests contraction.
Incoming new business flows swung the indices to expansion for the first time since May last year, with the sub-index on new orders rising from 47.4 in January to 54.2 last month, while the sub-index on new export orders bounced back from 46.9 to 53.8, the report said.
The report also showed a significant pickup in the output sub--index, which rose from 46.1 in January to 53.8 last month, suggesting production activity is likely to remain steady next month and beyond.
After seven consecutive months of destocking, manufacturers started to step up -purchasing and increase their inventories of finished goods last month, pushing the sub-index on stocks of finished goods from 48.1 to 52 and the sub-index on stocks of purchases from 48.2 to 51.8, the report said.
Employment conditions also improved, as the sub-index inched higher from 50.2 in January to 51.3 last month, it said.
While the output price -reading moved above the 50 level for the first time in eight months last month, tough competition helped keep inflation at historically low levels, Kwok said.
In all, “the latest PMI reading provides an encouraging outlook for Taiwanese manufacturers, but the results should be taken with a pinch of salt because the US and China are just not out of the woods yet,” she said.
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