TAIPEI — Taiwan’s manufacturing sector continued to gain momentum in January, according to the latest purchasing managers index (PMI) compiled by the Chung-Hua Institution for Economic Research (CIER).
The PMI, a gauge of manufacturing expansion and a leading economic indicator, stood at 57.7 in January, up from 51.3 the previous month.
An index higher than 50 indicates expanding manufacturing activity, according to the Taipei-based think tank, which released the new index Monday.
“We had expected a continued upward trend, but we didn’t expect such a big increase” of 6.4 points, CIER President Wu Chung-shu said at a press briefing.
Wu attributed the sharp rise to confidence in the improving global economy and increased orders ahead of the Lunar New Year holiday.
For five consecutive months from July to November last year, the index was below 50, indicating contraction and reflecting Taiwan’s stagnant exports and domestic consumption. It took a positive turn in December.
The monthly PMI is composed of five subindices — new orders, production, employment, inventories and supplier deliveries.
All of the subindices increased in January to over 50, with new orders posting the biggest rise, from 52.6 to 66.6.
Among the five categories, the production subindex showed the second biggest increase, Wu noted.
Meanwhile, the subindices of inventories and supplier deliveries both turned positive in January, rising from 47.8 to 53 and 48.2 to 51.5, respectively.
A separate subindex that gauges the level of business optimism toward the economic outlook for the next six months, soared from 50.4 to 61.4, marking the second consecutive positive monthly reading.
“This is a very good sign,” Wu said, adding that it was the first time since the survey was first released last July that all six industries surveyed had a positive economic outlook.