The official manufacturing purchasing managers’ index (PMI) last month accelerated to 57.7, the fastest pickup since March 2018, as operating conditions brightened further on the back of new technology product launches, holiday inventory demand and 5G deployment, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
It was the third straight month that the critical economic gauge rose with all sectors reporting an upturn in business, the first industry-wide growth since May last year, CIER said.
CIER president Chang Chuang-chang (張傳章) attributed the improvement to frontloading ahead of the Mid-Autumn Festival, new product releases by Apple Inc and continued 5G deployment.
Photo: AFP / Sam Yeh
“Even firms selling electrical and machinery equipment reported an uptick after a 16-month hiatus,” Chang said, suggesting that the recovery is across the board and healthy.
CIER economist Chen Hsin-hui (陳馨蕙) said Washington’s blacklisting of Semiconductor Manufacturing International Corp (中芯國際) and the launch of new smartphones and automobiles contributed to the PMI rise last month.
However, Kamhon Kan (簡錦漢), an economist at Academia Sinica’s Institute of Economics, warned of possible uncertainty faced by the electric and electronics sector.
He cited factors such as the US presidential election next month, a potential second wave of COVID-19 infection and the fading benefits of rush orders received by Taiwanese firms due to US sanctions on Huawei Technologies Co (華為).
PMI data aim to gauge the health of the local manufacturing industry, with values larger than 50 indicating expansion and scores lower than the threshold signaling contraction.
Earlier growth was limited to suppliers of biochemistry products and electronics used for remote working and learning.
The sub-index on new business orders last month fell from 62.5 in August to 61.4, while the reading on industrial production rose from 59.2 to 61.3, CIER’s report found.
The measure on raw material prices rose from 58.9 to 67.6, reflecting better demand for non-tech products, as countries around the world kept their economies open, despite rising coronavirus infections.
Overall, Taiwanese firms turned more positive toward inventory building, as evidenced by the increase in the sub-index from 50.6 to 53.3, while clients’ inventory reading rose from 41.9 to 42.5, but still remained in contraction mode, CIER said.
Local manufacturers are generally upbeat about the landscape moving forward, with the six-month business outlook climbing from 53.5 to 58.6.
However, suppliers of electrical and machinery equipment were the only sector that did not share the rosy sentiment, the CIER said.
The non-manufacturing index (NMI) fell 3.8 points from the previous month to 55.6, it said.
The NMI had expanded for four consecutive months and some degree of correction is harmless, Chang said.
Most service-oriented firms expect business to remain strong in the coming six months, even though companies in the hospitality and financial sectors have a dim view, CIER said.
Additional reporting by CNA
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