The nation’s purchasing managers index (PMI) rose for the sixth consecutive month to 55 points last month from 53.8 a month earlier — the strongest reading since last March, an HSBC survey showed yesterday.
The composite index, which gauges the health of the manufacturing sector, signaled a “robust expansion” of the sector, the bank said in a statement.
A score above 50 indicates an improvement in business conditions, while anything below 50 indicates worsening conditions.
“Taiwan’s economy continues to stage an impressive rebound, fuelled significantly by rising export orders. Most encouragingly, the employment component of the HSBC PMI index has tracked above 50 for a second month in a row, signalling a stabilization of the labour market and domestic demand,” Frederic Neumann, a senior Asian economist at HSBC, said in the statement.
“Overall, Taiwan’s economy should expand by a robust sequential pace in the third quarter, although in annual terms output is still likely to be down,” he said.
The nation’s new orders index jumped to 57.8 last month from 49.8 in March, which reflected better macroeconomic conditions that have triggered a rise in demand and domestic manufacturing, the bank said.
Although the output growth index showed little movement at 60.5 last month compared with 60.7 in July, the speed of recovery so far this year is exceptional considering the severe retrenchment seen in the second half of last year, the bank said.
Despite markedly increased levels of production, local manufacturers continued to experience both rising work backlogs and dwindling stocks of finished goods.
Urgent orders have eaten into stocks, but insufficient production was the primary reason for work backlogs and low stocks, the bank said.
Surveyed manufacturers from the nation’s 300 industries said production capacity had been limited by labor shortages.
The employment level index rose to 52.9 last month as manufacturers sought to boost capacity, the bank said.
Stocks of raw materials for production continued to dwindle last month, but at a rate slower than the previous month.
Suppliers’ delivery times worsened as a result of a shortage of stocks at vendors, with input prices rising substantially in August and at a markedly higher rate than in July, the survey showed.
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