Taiwan’s manufacturing activity expands for 10th consecutive month

Manufacturing activity in Taiwan expanded in December for the 10th consecutive month amid a gradual recovery of the domestic economy, the Chung-Hua Institution for Economic Research (CIER) said Tuesday.

It said the non-manufacturing sector also showed expansion in December, for the first time in two months, with the index rising 1.5 points from a month earlier to 51.3.

In the manufacturing sector, although the purchasing managers index (PMI) fell 1.4 points in December from the previous month to 55.9 points, it remained above the 50 point threshold, showing an expansion, said CIER, one of the leading think tanks in Taiwan.

CIER president Wu Chung-shu (???) said that despite the expansion of manufacturing activity in December, the drop in the PMI was an indication that the recovery of the domestic economy was still mild.

He forecast, however, continued economic growth in 2017, citing the improvement in activity in both the manufacturing and non-manufacturing sectors.

In December, the sub-PMI index for suppliers' deliveries rose 0.1 from a month earlier to 56.1, while the sub-PMI index for inventories remained at 53.2, the TIER data showed.

However, the sub-PMI indexes for new orders, employment, and production fell 4.0, 2.2 and 0.9, respectively from a month earlier to 57.3, 53.4 and 59.5, according to the data.

Among the six industries in the PMI, the sub-index for the electricity/machinery sector remained unchanged from November, while other five -- chemical/biotech, food/textile, infrastructure/raw materials, transportation, and electronics/optoelectronics dropped, CIER said.

The sub-indexes for five of the major eight industries -- education, financial/insurance, information/communications, retail and wholesale -- trended higher month-on-month in December, while the sub-indexes for the hospitability/food/ beverage and transportation/warehousing sectors fell, CIER said.

The sub-index for the real estate/construction industry remained unchanged, the think tank said.

In late November, the government revised its growth forecast for Taiwan's 2017 GDP from 1.88 percent to 1.87 percent, which was higher than the 1.35 percent growth estimated for 2016, in reflection of a rebound in Taiwan's exports.

Meanwhile, Wu also commented on the newly implemented five-day workweek regulation, saying it will push up operating costs for businesses and lead to higher inflation in Taiwan.

Under the new rules, the maximum working hours have been reduced from 84 hours every two weeks to 40 hours a week, and employees are now entitled to one mandatory day off and one "flexible" rest day a week.

Employers face stiff overtime costs if their employees have to work on the "flexible" day off and must provide a compensatory day off to employees who work on national holidays.

Wu urged the business sector to launch more competitive products to deal with the effects of higher operating costs.

Source: Focus Taiwan News Channel