The official manufacturing purchasing managers’ index (PMI) last month was 62.7, soundly in the expansion zone for the ninth straight month, with all sectors reporting an uptick in business amid deepening concern over inflation risks, the Chunghua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The economic barometer has been above 60 for five months in a row, although it has slowed from a peak in January, CIER president Chang Chuang-chang (張傳章) said, calling attention to a record 91.6 reading for raw-material prices that makes inflation a serious issue.
“Prices for oil, raw materials and mass commodities are spiking, and producers might soon pass costs on to consumers,” Chang said.
Photo: Yen Hung-chun, Taipei Times
PMI data aim to capture the health of the manufacturing industry, with scores under 50 indicating contraction and values above the neutral threshold signaling expansion.
Policymakers must not take the price hikes lightly, but should map out responses, Chang said.
Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said that producers are generally absorbing price hikes, but that would not last long.
Money-printing by major central banks to mitigate the pain of the COVID-19 pandemic is fueling inflation and expectations of a global economic recovery is lending support.
The government’s business climate monitor in February flashed “red” for the first time in a decade, indicating that the nation’s economy is booming and might overheat if the boom extends into the second half of this year, National Development Council Minister Kung Ming-hsin (龔明鑫) said last month.
The central bank has said that it would not raise interest rates ahead of global peers to prevent hot money from destabilizing the local currency.
The PMI subindex on new business orders was 60.5, while the industrial production gauge was 59.2, CIER’s monthly survey found.
The measure on delivery time gained 1.4 points to 74.7, the fastest rise in history as shipping delays and container shortages added difficulty, Chang said.
The gauge on inventory rose to 59.9, but customer inventory remained weak at 45.2, the survey showed.
Firms slightly increased headcounts to help digest demand.
Companies in all sectors have rosy expectations, sending the six-month outlook reading to an all-time high of 78.8, Chang said.
The non-manufacturing index rose 3.1 points to 55.2, as service-oriented sectors — excluding wholesale firms, restaurants and hotels — shared the benefit of a booming economy, the CIER said in a separate report.
An upturn in the next six months is likely in the non-manufacturing sectors, including hospitality providers, it said.
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