The nation’s manufacturing activity expanded for the 15th straight month last month, despite the official purchasing managers’ index (PMI) dipping last month from a month earlier, according to a report released yesterday by the Chung-Hua Institution for Economic Research (中華經濟研究院, CIER).
The PMI reading stood at 58.6 last month, down 1.6 points from a month earlier, the Taipei-based think tank said. A PMI above 50 represents expansion and below 50 signifies contraction.
The index — a leading indicator of the economic outlook over the next three to six months — comprises five subindexes: new orders, production, employment, inventories and supplier deliveries.
CIER president Wu Chung-shu (吳中書) said the results of the PMI last month indicated a slowing economic recovery, in line with the global trend.
GOOD RECOVERY RATE
“Taiwan’s economic recovery is continuing its pace, because the index has been maintained at a relatively high level,” Wu told a press conference.
The PMI is to consolidate in the following months, Wu said, adding that he would continue to keep a bullish outlook for the nation’s economy if the index maintains above 55 points by the end of this year.
Although the subindexes of new orders and production both dropped last year from a year earlier, both sectors were maintained at a relatively high level and were the major driver for the manufacturing industry last month, the institute said in a report.
The subindex of new orders fell 4.8 points to 62.3 points last month from a month earlier, while the production subindex was down to 60.9, a decrease of 5.9 points from April, the report said.
The three remaining subindexes stayed in expansion territory last month, according to the report.
The PMI survey last month also showed that recent anti-China protests in Vietnam did not have a major impact on Taiwan’s manufacturing sector, as most surveyed companies still experienced growing or stable numbers of orders, Wu added.
A separate PMI report issued by British bank HSBC Holdings PLC and compiled by Markit Ltd, a London-based financial data provider, showed the nation’s manufacturing activity reading rose slightly to 52.4 last month, from 54.3 in April.
LACKING MOMENTUM
Hong Kong-based HSBC economist John Zhu (朱日平) said Taiwan’s manufacturing sector stabilized last month, but still lacks momentum.
“We saw some encouraging acceleration in output and employment growth [last month], but domestic demand remains relatively weak compared with robust external demand, dragging overall growth on new orders to an eight-month low,” the HSBC economist said in a statement.
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