Taiwan's manufacturing activity turns stable in August
CNATAIPEI--Taiwan's manufacturing activity is showing signs of turning stable as the purchasing mangers' index (PMI) for August ended a four-month decline in reflection of an improving global economy, according to the Chung-Hua Institution for Economic Research (CIER).
September 1, 2013, 12:02 am TWN
In a report released Friday, the think tank said Taiwan's PMI for August stood at 52.6, the same as in July. After hitting a high of 62.4 in March, the PMI fell for four straight months but remained above 50.
A PMI reading of above 50 shows an expansion in manufacturing activity.
CIER President Wu Chun-shu said China and the eurozone reported a pick-up in manufacturing activity, which indicated that the global economic fundamentals are improving and demand in growing worldwide.
As a result, the “new orders” sub-index in the local PMI rose to 55.1 from 52.6, Wu said, adding that Taiwan's exports are expected to grow in the upcoming months. But he said the increase was not significant enough to indicate that the local economy was expanding mildly.
Wu said he was particularly concerned about the local electronics and optoelectronics sector, which showed a drop in PMI in August to 49.5 from 53.8, contracting for the first time since March.
The economist said some manufacturers in the electronics and optoelectronics sector faced falling export orders on a lack of peak season effects in the third quarter, while others saw increases in their exports as rush orders arrived.
The uneven growth in the electronics and optoelectronics sector, which serves as the backbone of Taiwan's exports, has affected Taiwan's export-oriented economy.
Steve Lai, executive director of the Center for Purchasing and Supply Studies, said production picked up in August among electronics component suppliers, but remained stagnant in the area of high-tech device assembly.
Chen Hsin-hui, an assistant research fellow at the CIER's Center for Economic Forecasting, said with shipment forecasts for smartphone and tablet computers being revised downward for 2013, the electronics and optoelectronics sector has turned cautious about the market outlook for the second half of the year.
Some electronics manufacturers are even forecasting that due to slower demand, the sector may have to adjust inventory in the second half, he said.
The “production” sub-index of the PMI rose to 56.4 in August from 55.8, and the “supplier deliveries” sub-index increased to 49.6 from 48.3, while the “employment” sub-index fell to 52.6 from 54.3, and the “inventories” sub-index dropped to 49.5 from 51.5, according to the CIER.