Manufacturing stays on track for growth, but outlook modest
By John Liu, The China PostTAIPEI, Taiwan -- Taiwan' manufacturing purchasing managers' index (PMI) registered at 52.6 points in September, the same level as in August, indicating that the manufacturing sector is continuing on a slow-growth trend.
October 2, 2013, 12:09 am TWN
The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) released its July PMI data yesterday. The index is a gauge of manufacturing expansion in which any score above 50 represents expansion and any below indicates contraction.
Five Major Sub-indices
Of the five major sub-indices, only the inventories index showed contraction and was pegged at 49.4. All other indices showed expansion, with the new orders index pegged at 50.7, the production index at 55.5, the employment index at 54.5 and the supplier deliveries at 52.6.
Of the other indices, the customer' inventories index was registered at 46.1, the prices index at 55.7, the backlog of orders at 45.8, the exports at 48.7, and the imports at 52.2.
Six Major Manufacturing Industries
Of the six manufacturing industries categories, five reported growth in September in the following order: transportation equipment (59), electronic and optical (54.2); chemical, biological and medical (51.3), basic materials (50.3) and electrical and machinery equipment (50.2). Only the foods and textiles industry contracted (49.5) in September.
Manufacturers were less optimistic about the future in September. The Six-month Outlook index registered at 51, a decrease of 2.3 points compared to the August reading of 53.3. The outlook index has been slipping since March this year.
Weak Economic Recovery
The PMI has been pegged above 50 for seven consecutive months, showing that the economy is on the recovery track, CIER President Wu Chung-shu (吳中書) said. However, the PMI has also stayed level for three consecutive months, indicating “the expansion was rather slow” and “fell short of expectations,” Wu added.
While the new orders index was pegged at 50.7 and showed expansion, it has reached the lowest point so far this year. The production index also declined 0.9 points from August. The decline in new orders and production were the main reasons behind the weak expansion in September, the CIER said.
Wu expects improvements in the manufacturing sector in the fourth quarter, but added that improvement is not likely to be consistent. In other words, there might be a “roller-coaster ride,” he said.
The performance of every industry varies, according to Steve Lai (賴樹鑫), the executive director of Supply Management Institute in Taiwan. The market expected the launch of new the iPhone would boost demand for electronics parts and components. However, an increase of production in the industry in fact occurred two months ago. Some of the manufacturers in Apple's supply chain had a good month, especially for those in the optical and electronics industry. However, it was not enough to bring momentum of the whole manufacturing sector, Lai said.