Tue, Dec 03, 2019 - Page 12 News List

Manufacturing PMI hits 15-month high

MARKED IMPROVEMENT:The sub-index on new business orders last month climbed to 61 from 52.7 in October, with firms in the 5G sector driving the increase, CIER said

By Crystal Hsu  /  Staff reporter

Taiwan’s official manufacturing purchasing managers’ index (PMI) last month rose to a 15-month high of 54.9, driven by demand for electronics and biomedicine products, as market uncertainty subsided, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

About half of the manufacturing sectors reported a pickup in business, especially firms involved in the deployment of 5G products and services, the Taipei-based think tank said.

“Business improvement was most evident for firms in the global 5G supply chain,” CIER president Chen Shi-kuan (陳思寬) told a media briefing, adding that the absence of economic deterioration in the US and Europe also helped.

PMI aims to gauge the health of the manufacturing industry, with scores of more than 50 indicating expansion and those below the threshold suggesting a contraction.

The sub-index on new business orders climbed to 61 from 52.7 a month earlier, with 5G deployment being the growth driver, CIER researcher Chen Shin-hui (陳馨蕙) said.

Not only chipmakers and chip designers, but also firms supplying related chemical materials and high-performing chip-testing services and equipment reported a pickup in business, Chen Shin-hui said.

Other firms said that some orders that had been canceled were now re-established, she added.

Makers of textiles and food products fared better, with the score for new business orders rising to 70.7 from 65.6 in October, the institute’s survey found.

Seasonal and rush orders helped boost the sub-index on industrial production to 60.4 from 55.4 a month earlier, while the gauge on employment levels rose to 55.6 from 50.6, the survey found.

Order visibility for 5G demand could extend into the first quarter of next year, Chen Shin-hui said.

Still, companies producing raw materials, transportation tools, electrical and machinery equipment were not out of the woods and reduced purchasing activity, the survey said.

The sub-index on raw material prices dropped to 44.1, after scoring 46.4 one month earlier, it found.

Despite two straight months of positive PMI data, firms remain conservative with the sub-index on business prospects in the next six months coming in at 49, compared with 45.7 in October.

The slow season for component suppliers of technology products is around the corner, except for companies that are helping clients roll out 5G devices early next year.

The operating conditions for non-manufacturing sectors gained further momentum, as the non-manufacturing index (NMI) grew to 55 from 53.9, with all sectors reporting business expansion, CIER said.

It is the ninth straight month that the NMI has increased.

Service-oriented firms, such as app developers and telecoms operators, are also aiming to take advantage of 5G-related businesses, Chen Shin-hui said.

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