Manufacturing sector at 6-month high in December
By John Liu, The China Post
January 3, 2014, 12:02 am TWN
TAIPEI, Taiwan -- Taiwan's Purchasing Managers' Index (PMI) in December was pegged at 53.6, the highest in about half a year, according to a report released by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday.
However, China's official PMI, published by the National Bureau of Statistics on Wednesday, dipped to 51.0 in December from November's 51.4, confirming the market's decelerating factory growth.
PMI is a gauge of manufacturing expansion in which any score above 50 points represents expansion and any score below indicates contraction.
With the publishing of the December figure, the manufacturing sector has expanding for 10 continuous months. The PMI in December grew by 1.6 compared with the figure in November. The index has grown for two continuous months.
The PMI in December was the highest since July last year. Increases in new orders and production levels contributed to the surge, CIER said.
The new orders index stood at 57, which is the highest figure since April last year. The production index stood at 58, which is also the highest figure in the past eight months. The CIER said that the increase in new orders helped to churn out more production.
Of the six manufacturing industries, except for the foods and textiles industry which contracted from the previous month with its PMI pegged at 49.5, all other industries reported growth in December. In order of magnitude of expansion, the industries were: chemical, biological and medical (60), transportation equipment (54.7), electronics and optics (53), electrical and machinery equipment (52.7), and basic raw materials (52.6).
Economy Shows Signs of Improvement
Of the five sub-indices, the new orders expansion index, the production index, the employment index and the supplier deliveries index continued to show expansion, while the inventories index showed contraction.
According to CIER President Wu Chung-shu (吳中書), the figure in December indicates a very different economic phenomenon compared with sluggish economic performance in the past year, and it appears that the economy is increasingly stabilized.
Wu also pointed out that PMI usually shows expansion before the Chinese New Year, and whether or not the economy is really on track for recovery depends much on economic performance after the Lunar New Year.
As economies improved around the globe, Wu predicted that exports would improve this year as well, and that annual GDP growth would exceed 3 percent. While the economy is on track for recovery, it somehow lacks momentum, Wu said.
If businesses were able to make more profits, they should provide raises to their employees, Wu said, adding that this would add purchasing power and increase private demand.
The survey shows that businesses are optimistic regarding the economy in the future. The “six-month economic outlook index” registered at 54.8, an increase of 6.5 from the previous month.