The official manufacturing purchasing managers’ index (PMI) last month fell to 63.2, slowing from an unprecedented high a month earlier, as the Lunar New Year holiday cut the number of working days, while firms displayed the strongest business sentiment on record, the Chunghua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
All manufacturing sectors except textile and food suppliers reported business upswings last month from a year earlier, although the Lunar New Year holiday eliminated one week, which explains why the economic barometer stayed in the expansion zone, but shed 1.9 points, the Taipei-based think tank said.
PMI data aim to capture the health of the manufacturing industry, with scores lower than 50 indicating contraction and values above the neutral threshold signaling expansion.
Photo: Chen Wen-chan, Taipei Times
“Holiday disruptions accounted for the month-on-month retreat, which is harmless, as firms expressed clear order visibility for the coming six months,” CIER president Chang Chuang-chang (張傳章) told a media briefing.
Expectations of a global economic recovery have led businesses around the world to rebuild inventory, ramping up production at their local suppliers, Chang said, adding that the trend would become more evident as more people receive COVID-19 vaccines.
The reading on the six-month business outlook added 3.2 points to a record 73.3, as orders swelled across all sectors, Chang said.
For last month, the sub-index on new work stood at 65.6, comfortably in the positive territory, and so was the industrial output measure, at 63.9, the CIER survey showed.
Hiring activity hovered at a similar level of 58, or 0.5 points lower from one month earlier.
The sub-index for delivery time held steady at 73.3, as container shortages and shipping delays deteriorated, it said.
Customers’ inventory level was 44.5, 1.3 points lower from one month earlier.
The measure on raw material prices surged to 87.8, the highest since the launch of the survey in July 2012, as recovery expectations pushed up demand, Chang said, adding that a global container shortage and earlier snow storms in the US made things worse.
Strong order visibility drove some firms to rearrange shipment schedules by first meeting demand from customers who offered higher prices or placed larger orders, CIER researcher Chen Shin-hui (陳馨蕙) said.
Firms are more eager to replenish inventory and less concerned about material costs, compared with the previous quarter, Chen said.
Purchasing activity among non-manufacturing firms last month showed a similar pattern of losing some steam with a reading of 52.1, 2.9 points lower than in January, CIER said.
Unfavorable holiday effects were poignant for shipping and logistics service providers and insurance companies, the institute said.
Service-focused firms are generally upbeat about business moving forward, except restaurants and hotels, it said.
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