TAIPEI (CNA) – Manufacturing activity in Taiwan remained in expansion mode for the 20th consecutive month in October on the back of solid demand at a time when the world economy has been recovering, the Chung-Hua Institution for Economic Research (CIER) said Wednesday.
CIER, one of the leading economic think tanks in Taiwan, said the local purchasing managers index (PMI) for the manufacturing sector for October stood at 57.7, and while the latest figure was down 1.0 from the previous month, it remained above the 50 point mark, which indicates expansion mode, the CIER said.
The PMI has now remained in expansion mode for 20 months in a row, the equal longest ever, tied with an earlier expansion from March 2013 to October 2014, CIER said.
For the service sector, the non-manufacturing index (NMI) for October fell 0.6 from a month earlier to 53.0 but remained in expansion mode for an eighth straight month, the economic think tank said.
In both the PMI and NMI, readings above 50 indicate expansion, while those below 50 represent contraction.
CIER President Wu Chung-shu (吳中書) said at a news conference that in addition to the longest expansion mode period for the local manufacturing sector, many firms remain upbeat about market prospects over the next six months, indicating the local economy is likely to keep growing at a steady pace.
The latest PMI figure came after the Directorate General of Budget, Accounting and Statistics (DGBAS) reported on Tuesday that Taiwan’s economic growth for the third quarter of this year was 3.11 percent, beating an earlier estimate of a 1.89 percent increase.
Wu said it is possible the annual economic growth forecast for Taiwan will now be revised upwards for 2017.
In October, CIER raised its estimate of GDP growth for 2017 to 2.18 percent, an increase of 0.04 percentage points on its earlier forecast. The DGBAS, which has forecast 2.11 percent growth for the year, is expected to update its forecast later this month.
However, of the five factors in the October PMI, only the sub-index for inventories moved higher, up 0.6 to 54.8, while the other four moved lower, CIER said.
The sub-indexes for new orders, production, employment and supplier deliveries for October fell 1.8, 2.8, 0.5 and 0.4, percentage points respectively from a month earlier, to 58.6, 57.9, 57.3 and 59.7, CIER added.
Among the six industries that make up the manufacturing sector in the CIER model, the sub-indexes for food/textile industries and the transportation sector improved, while those for the electronics/optoelectronics, the electricity/machinery, chemicals/biotech and the infrastructure/raw materials sectors fell, CIER said.
For the NMI, two of the four major factors – business activity/production and supplier deliveries, rose 0.5 and 0.4 points, respectively, to 53.6 and 53.8 in October, while the sub-indexes for new orders and employment, fell 1.5 and 1.7, respectively, to 53.1 and 51.4, the think tank said. •
By Tsai Yi-chu and Frances Huang