Expansion of Taiwan’s manufacturing sector continued in December 2019

The "Inception," a cargo ship operated by Taiwan-based Yang Ming Marine Transport Corp. is unloaded Tuesday, April 10, 2007 at the Port of Tacoma in Tacoma, Wash. Among Taiwan's six manufacturing categories, the index for the food and textile sector maintained the highest level, although it dropped 0.3 points from the previous month. (AP Photo/Ted S. Warren)

TAIPEI (CNA) — Taiwan’s manufacturing sector remained in expansion mode in December 2019, as the seasonally adjusted Purchasing Managers’ Index (PMI) rose 1.3 points from a month earlier to 56.2, the Chung-Hua Institution for Economic Research (CIER) said Thursday.

The expansion of the manufacturing sector was driven mainly by booming 5G technology development and increased orders ahead of the Lunar New Year, which boosted high-tech industries, CIER said.

It was the third consecutive month of PMI growth and the steepest since June 2018, according to the CIER data.

The PMI is based on a monthly poll of executives at some 300 representative manufacturing companies and covers the areas of new orders, inventory levels, production, supplier deliveries, and employment. A score of 50 indicates no change, over 50 signals expansion, and under 50 means decline.

In December, the non-manufacturing index (NMI) for Taiwan’s service sector fell by 0.9 points from a month earlier to 54.1, but remained in expansion mode for the 10th straight month, CIER said.

Among the six manufacturing categories, the index for the food and textile sector maintained the highest level, although it dropped 0.3 points from the previous month.

The sector was boosted mainly by increased demand ahead of the Lunar New Year holiday in January and the Tokyo 2020 Summer Olympics, CIER economist Chen Hsin-hui (陳馨蕙) said.

The sub-index for the electronics and optoelectronics sector also remained in expansion mode in December, rising 2.7 points from a month earlier to 56.6, on the rapid development of 5G and other emerging technologies, CIER said.

Manufacturing in three other industries also expanded, namely transportation (54.4), chemical/biotech (51.5) and basic materials (51.3).

Only the electricity/machinery industry contracted, dropping to 49.5.

Although most of the businesses polled were not optimistic about the 2020 outlook and some said that they were not operating at full capacity, it does not mean that this year will be grim, Chen said.

She said the indicators for sustainable growth of the domestic economy will not become clear until March due to the reduced number of work days in January and February.