Manufacturing activity recovers but remains in contraction mode

2019/02/01 17:44:55 fontsize-small fontsize-default fontsize-big
Manufacturing activity recovers but remains in contraction mode

Taipei, Feb. 1 (CNA) Manufacturing activity in Taiwan rebounded in January but still remained in contraction mode, the Chung-Hua Institution for Economic Research (CIER) said Friday.

CIER, one of the leading think tanks in Taiwan, said the recovery in manufacturing activity reflected an increase in orders to meet seasonal demand ahead of the upcoming Lunar New Year holiday, which starts on Saturday.

The Purchasing Managers' Index (PMI) for January rose 3.1 from a month earlier to 47.9 after the December PMI fell to 44.8, the lowest since the index was introduced in July 2012.

In contrast, the non-manufacturing index (NMI) for the local service sector in January fell by 2.6 from the previous month to 49.0, moving into contraction mode, the data indicated.

For the PMI and NMI, readings above 50 indicate expansion or growth, while those below 50 represent contraction.

Shikuan Chen (陳思寬), president of CIER, told the press that new orders and production increased in January largely due to the electronics and optoelectronics industries, while orders placed with the local food and textile industries also grew, pushing up overall manufacturing activity.

However, Chen said it was too early to say whether the local PMI has bottomed out since the manufacturing sector remains cautious about the business climate in the first half of this year.

All of the five major factors in the January PMI improved from a month earlier with the sub-indexes for new orders, production, employment, suppliers' deliveries and inventories up 4.0, 6.0, 1.6, 1.3 and 2.2, respectively, to 46.6, 49.1, 49.3, 46.3 and 48.0. Nevertheless, all the factors remained in contraction mode.

Among the six major industries in the local PMI, only the sub-index for the electricity/machinery moved lower in January, with the sub-indexes for the food/textile, transportation, electronics/optoelectronics, chemicals/biotech, and basic raw materials industries moving higher, though only the food/textile industry was in expansion mode, the think tank said.

As for the local service sector, Chen said, consumption fell in January as many consumers brought forward purchase plans due to promotional campaigns in September-November.

Of the four major factors in the January NMI, only the sub-index for suppliers' deliveries moved higher by 0.9 from a month earlier to 52.1, while the sub-indexes for business activity/production, new orders, and employment moved lower by 6.7, 4.4 and 0.1, respectively, to 47.5, 46.0 and 50.3.

Only suppliers' deliveries and employment were in expansion mode, CIER said.

(By Pan Tzu-yu and Frances Huang)
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