Business activity in the manufacturing sector increased last month amid an improvement in external demand, but purchasing managers’ index (PMI) data showed that non-manufacturing firms failed to share the benefit, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The official manufacturing PMI rose by its fastest pace in 20 months to 57.3 last month, while the non-manufacturing index contracted for the second straight month to 49.8, weighed by soft consumer confidence and a slump in the property market.
“The latest PMI data indicate a solid and broad-based recovery for the manufacturing industry,” buoyed by demand for all Taiwanese products, not just components for Apple Inc devices, CIER president Wu Chung-shu (吳中書) said.
The PMI measures the health of the manufacturing industry, with scores above 50 indicating an expansion and scores below 50 indicating a contraction.
The manufacturing sector plays a crucial role in the nation’s export-reliant economy, accounting for 76.7 percent of GDP in the third quarter, Directorate-General of Budget, Accounting and Statistics data showed.
The sub-index on new orders climbed to 61.3, up 6.3 points from October, while the production sub-index gained 4.7 points to 60.4, the report said.
All manufacturing sectors reported a conspicuous pickup in business, showing that the growth is not limited to the high-sales season for technology products, Wu said.
Companies also increased their hiring, with the sub-index on employment posting a healthy 55.6, marginally down from October, the report said.
Firms were being cautious about staffing and inventory to control costs that have risen significantly due to higher input prices.
The sub-index on raw material prices soared to 68.2, a sharp increase of 8.9 points from the previous month, the report said.
Business activity is expected to increase going forward, as the six-month outlook climbed from 51.8 to 54 and all sectors shared the positive sentiment, the report said.
The non-manufacturing sector forecast was a different story as the six-month outlook fell from 39.4 to 34.5, the report said.
“The data stems from the negative expectations of firms in the real estate and tourism sectors,” Wu said.
Financial and insurance companies were also bearish after foreign investors pulled funds out of the local bourse last month to chase higher returns elsewhere on expectations of the US Federal Reserve raising its interest rates later this month, Wu said.
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