The nation’s official manufacturing purchasing managers’ index (PMI) last month climbed to 56, the highest level this year after expanding for the second consecutive month, as most firms reported a business upturn ahead of the high season for technology products, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
However, the Taipei-based think tank cautioned against interpreting the latest PMI as a sign of a recovery, saying it only indicates that the operating conditions improved from one month earlier.
“Firms gained better order visibility in August, but cannot see the landscape ahead due to the COVID-19 pandemic,” CIER president Chang Chuang-chang (張傳章) told a media briefing in Taipei.
The PMI gauges the health of the manufacturing industry, with scores larger than 50 indicating expansion and points below the threshold indicating a contraction.
Among the five major components in the PMI, the sub-index for new orders rose by 5.8 points to 62.5 and the sub-index for industrial production increased from 58.3 to 59.2, both rising for the second consecutive month, the institute said.
The sub-index for the business outlook over the next six months rose 4.2 month-on-month to 53.5, marking the first increase after six months of contraction, it said.
The sub-index for headcounts grew from 51.7 to 52.5, as firms increased their workforces in a bid to fill orders, it added.
The data lent support to a healthy third quarter, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.
Although order visibility remains poor, firms generally feel upbeat about their business outlook, he said.
While the reading on the six-month outlook rebounded to positive territory after a six-month hiatus, Chang quoted the National Development Council as saying that the data are not strong enough to suggest an industry-wide recovery, with the global COVID-19 pandemic still ongoing.
Local business executives have said that the PMI reading does not necessarily mean local industries have regained stable growth momentum fueled normally at this time of the year by orders for components for next-generation technology gadgets.
Instead, rush orders linked to remote working and learning have benefited local electronics suppliers, but they might not continue beyond next quarter.
Service-oriented firms continue to thrive, with the non-manufacturing index rising from 57.3 in July to 59.4 last month, the fastest expansion since the data started to be compiled in August 2014, the institute said.
All sectors contributed to the upturn and most expect the momentum to extend into the next six months, it said.
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