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CIER forecasts PMI of 80.5 for coming year

TAIPEI, Taiwan -- Taiwan's Purchasing Managers Index (PMI) will hit 80.5 in the coming year, indicating improvements in the manufacturing sector down the road, according to a forecast by the Chung-Hua Institution for Economic Research (CIER), yesterday.

PMI is an economic indicator of the health of manufacturing. A value above 50 indicates that a sector is purchasing equipment and betting on future growth, while a figure less than 50 suggests a more pessimistic outlook and contraction.

According to the report, the PMIs of operation and profit margins were pegged at 65.8 and 58.3 respectively in the first half of 2014. Among report subjects, 51.8 percent of companies thought that operations in the first half of 2014 improved, compared with the latter half of 2013, while 38.6 percent believed that operations improved. Although the operations index rose, companies were still conservative in recruitment. Only 29.8 percent have increased hiring.

Companies in general expect revenues and capital expenditures to grow in 2014 compared to 2013. The PMI of the two categories were pegged at 74.6 and 67.5 respectively. Companies estimate that revenues, capital expenditures and capacity utilization will rise 7.09 percent, 4.67 percent and 6.48 percent this year compared to last year. Upgrades in capacity utilization mainly come from expanding human resources and working hours and a decrease in factory downtime. It showed that companies have adopted more active means to expand capacity.

Looking into the future, about 61.8 percent of companies expect that operation will improve in the second half of the year, with PMI standing at 76.3. About 43.4 percent of companies expect that profit margins will grow in the second half of the year. About 70 percent of companies expect that the employment rate will stay level in the remainder of year, and the PMI in this dimension registered at 60.3.

The PMI for operations in the coming 12 months is pegged at 80.5. About 70 percent of companies believe that their operations will improve in the future.

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