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June 27, 2017

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Holidays give way to manufacturing PMI rise in March

TAIPEI, Taiwan -- Taiwan's Purchasing Manager Index (PMI) registered 60.6 in March, up 10.3 points from the previous month, according to a report released by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday.

The rise reflects the fact that there were more working days in March than in February, in which the Chinese New Year holiday occurred. It also showed that firms were receiving steady orders in March, said CIER President Wu Chung-shu (吳中書). After making seasonal adjustment, the PMI in March is similar to the figure in February. Therefore, the growth in PMI in March does not necessarily represent a booming economy, Wu said, phrasing the current state of the manufacturing sector as "slowly expanding."

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

All five sub-indices that make up the PMI showed expansion in March: the new orders index was pegged at 65.7, the production index at 64.6, the employment index at 60.4, the inventories index at 54.2 and the supplier deliveries index at 57.9.

All six major manufacturing industries showed expansion as well: The PMI of the electronics and optics industry was pegged at 64.7, the electrical and machinery equipment industry at 59.3, the foods and textiles industry at 59.2, the chemical, biological and medical at 58.8, the basic raw materials at 55.1 and transportation equipment at 53.8.

Businesses in general are optimistic about the economy in the future. The "six-month outlook index" was pegged at 63.7. As the economy recovers, Wu forecast that the unemployment rate would drop to below 4 percent after November this year.

CIER Endorses Service Trade Agreement

When asked by the press about the much-disputed Cross-Strait Trade in Services Agreement, Wu expressed his personal endorsement for the service pact, saying that he looked forward to the pact clearing the Legislature in the shortest amount of time, as the pact plays a crucial role to domestic firms.

Without the service pact with mainland China, it would be very difficult for Taiwan to sign free trade agreements with other nations. And this would seriously impact local firms' ability to expand into the global market, Wu said.

Wu also played down the possibility of Chinese workers competing with locals in the job market upon the passing of the service pact. According to Wu, it is a healthy sign that "talent comes and goes," which will not only elevate local earning level to the international standard, but also facilitate exchange of the latest information and knowledge. If Taiwan chooses to closes its doors, local workforce are more likely to lag behind, for other nations will continue on the fast track of development, Wu said.

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