Manufacturing activity continued to expand last month, as demand from China, Europe and the US remained strong, a report by HSBC showed yesterday.
The financial services company’s purchasing managers’ index (PMI) for Taiwanese manufacturers showed that factory activity rose to 54 last month from 52.4 in May and 52.3 in April, driven mainly by increases in orders and manufacturing output.
A figure above 50 indicates an expansion.
The reading for last month reflected the strongest pace of improvement in the local manufacturing sector since February, HSBC said in a statement.
“Taiwan’s manufacturing sector is lifting off again after a brief first-quarter slowdown. This is consistent with official data showing manufacturing output at an all-time high,” Hong Kong-based HSBC economist John Zhu (朱日平) said in the statement.
HSBC’s purchasing managers’ index is a composite of 11 sub-indices — output, new orders, employment, suppliers’ delivery times and stocks of items purchased among them — that offers a snapshot of the nation’s manufacturing sector.
The bank said last month’s data signaled a solid improvement in overall business conditions faced by Taiwanese manufacturers.
For instance, output levels increased for the 10th successive month and at the quickest rate in four months, the report showed.
With sharp increases in total new business and new export orders, manufacturers also raised their purchasing activity and expanded their employment levels for the 13th successive month last month, HSBC said.
While the increase in staff numbers last month was the strongest since November last year, manufacturers still faced capacity pressures, resulting in larger backlogs of work in the month, according to HSBC’s report.
“The jump in the PMI new orders component in June suggests the growth momentum will continue into the third quarter,” Zhu said.
The latest data also showed the average input costs faced by manufacturers increased last month at the strongest rate in five months due to shortages in raw materials such as copper and steel.
Meanwhile, output prices fell for the fifth month in a row last month, albeit only marginally, which HSBC said could mean that some manufacturers were forced to discount their charges due to price reduction requests made by clients.
The nation’s official PMI data for last month is to be released today by the Chung-Hua Institution for Economic Research (中華經濟研究院).
In May, the official gauge dropped to 58.6 from 60.2 in April, indicating a slowdown in manufacturing expansion, data showed.
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