Taiwan’s manufacturing activity improves in March

According to CIER, Taiwan's manufacturing activity improved significantly in March largely on the back of a jump in new orders and production. (Photo courtesy of CNA, 2018.4.2)

Taipei, April 2 (CNA) Taiwan’s manufacturing activity improved significantly in March largely on the back of a jump in new orders and production, the Chung-Hua Institution for Economic Research (CIER) said Monday.

The spike in new orders and production resulted from a rise in the number of working days in March from February, when the six-day Lunar New Year holiday fell, helping local manufacturing activity recover from a slump the previous month, when the Purchasing Managers’ Index (PMI) fell 8.6 from January, CIER said.

CIER, one of the Taiwan’s leading think tanks, said the manufacturing sector PMI for March rose 13.2 from February to reach 63.6, the second highest level since it was first released in July 2012.

The highest PMI level of 65.2 was recorded in March 2017, according to CIER.

CIER President Wu Chung-shu (吳中書) said at a press conference that manufacturing activity in Taiwan returned to normal in March as the number of working days increased from 15 to 23.

The service sector also benefited from the disappearance of seasonal effects in March, when the non-manufacturing index (NMI) rose 3.7 from February to 54.4, the think tank said.

In both the PMI and NMI, readings above 50 indicate expansion, while those below 50 represent contraction.

Wu said the simultaneous improvement in both the PMI and NMI showed the local economy remains on the path to steady recovery.

In February, the Directorate General of Budget, Accounting and Statistics (DGBAS) raised its forecast for Taiwan’s Gross Domestic Product in 2018 from an estimate of 2.29 percent growth in November to 2.42 percent, citing expected boosts in private consumption and investment.

The five major factors in CIER’s March PMI all moved higher with the sub-indexes for new orders and production rising 24.7 and 31.2, respectively from February to 68.8 and 68.2, according to CIER.

Meanwhile, the sub-indexes for employment, supplier deliveries and inventories grew 5.4, 0.2 and 4.3, respectively, from a month earlier to 56.8, 62.7 and 61.2 in March, CIER said.

The sub-indexes for the six major industries in the local manufacturing sector — chemicals/biotech, electronics/optoelectronics, transportation, electricity/machinery, food/textiles and infrastructure/raw material industries — all moved higher in March, CIER said.

However, after seasonal adjustments, the March PMI grew only 1-2 from February, Wu said, adding that the March figure did not indicate an overheating economy.

As for the NMI, two of the major factors increased from February to March, with the sub-indexes for business activity/production and new orders up 7.6 and 8.5, respectively, to 54.2 and 55.6, CIER said.

In contrast, the sub-indexes for employment and supplier deliveries fell 0.7 and 0.5, respectively, from a month earlier to 53.8 and 53.9 in March, CIER added, though the four factors remained in expansion mode, the think tank said.

(By Tsai Yi-chu and Frances Huang)