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Manufacturing exceeds expectations in April

TAIPEI, Taiwan -- Taiwan's Purchasing Manager Index (PMI) registered at 60.2 in April, which was higher than previously expected, according to a report released by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday.

A month earlier, the PMI registered at 60.6, reflecting the fact that there were more working days in March than in February, and not necessarily a booming economy.

PMI measures manufacturing expansion. Any score above 50 points represents expansion and any score below indicates contraction.

With April's PMI, the index has reached 60 for two consecutive months, which was beyond CIER's expectation.

It is a sign that the economy is expanding with a lot of momentum, said CIER President Wu Chung-shu (吳中書).

Upbeat Business Indices across the Board

All five sub-indices that make up the PMI showed expansion: The new order index (67.1) hit a record high since April 2013. The production index (66.8) also hit a new record since March 2013. The employment index (57.9) arrived at the second highest record in history, only behind the record high reached last month, demonstrating a strong job market. The supplier deliveries index (56.5) showed expansion for eight consecutive months, while the inventories index (52.6) also showed expansion for four consecutive months.

All six major manufacturing industries showed expansion as well. The PMI of the electronics and optics industry was pegged at 63.3; the electrical and machinery equipment industry at 58; the foods and textiles industry at 61.6, the chemical; biological and medical at 55.7; the basic raw materials at 58.4 and transportation equipment at 51.9.

Businesses in general are optimistic about the economic outlook. The “six-month outlook index” was pegged at 66, up 2.3 points from the previous month. April marked the fifth consecutive month to indicate an upbeat business outlook.

New ICT Products to Determine Future Index Performance

The inventories index of 52.6 in April, although indicating expansion, was down 1.6 points from last month, representing the lowest among all the five sub-indices.

It showed that companies are conservative in their inventory stocking. This implies that recent upbeat business indices may reflect strong “on-demand orders” instead of regular and sustainable orders, Wu pointed out.

According to Steve Lai (賴樹鑫), the executive director of Supply Management Institute in Taiwan, the better-than-expected figures in April was a result of ICT businesses increasing their production capacity to roll out new products later this year. How the market accepts these new products down the road will play a crucial role in determining the indices' future performance, said CIER assistant research fellow Chen Shin-hui (陳馨蕙).

With the latest data reported by the CIER, PMI were mostly about 50 around the world. The PMI of mainland China, European Union, Japan, Singapore and Hong Kong were pegged at 50.4, 53.3, 49.4, 50.8 and 49.4, respectively.

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