Manufacturing activity in Taiwan expanded for the ninth consecutive month in November on the back of a recovery in global demand, giving a boost to the export-oriented sector, the Chung-Hua Institution for Economic Research (CIER, 中經院) said on Thursday.
However, CIER, one of Taiwan’s leading think tanks, pointed out that non-manufacturing activity, referring to the service sector, contracted for the second consecutive month in November.
In November, the local manufacturing sector’s purchasing managers index (PMI) rose 2.8 points from a month earlier to 57.3, the highest level since March 2015, when the figure stood at 59.1.
The non-manufacturing index (NMI) for November stood at 49.8, representing another contraction.
PMI and NMI readings of above 50 indicate expansion in manufacturing and non-manufacturing activity, while a figure of below 50 indicates contraction.
Wu Chung-shu (吳中書), president of CIER, said that despite the increase in the local PMI in November, the general public have felt little of the improvement as the benefits of manufacturing activity expansion have largely gone to exporters rather than ordinary people. In addition, the service sector accounts for about 60 percent of Taiwan’s gross domestic product (GDP).
Wu noted that there would be a time lag before the expansion in manufacturing activity trickled down to the public.
The improvement in the November PMI echoed the government’s raising of projected GDP growth for 2016 from 1.22 percent to 1.35 percent, on the back of the export recovery.
In November, the sub-PMI indexes for new orders, production, suppliers’ deliveries and inventories rose 6.3, 4.7, 3.3 and 0.5 from a month earlier, respectively, to 61.3, 60.4, 56.0 and 53.2. However, the sub-PMI index for employment fell 0.7 from a month earlier to 55.6 in the same period.
Among the six industries in the PMI, five showed an improvement: the sub-indexes for chemical/biotech, food/textile, infrastructure/raw materials, transportation and utilities moved higher from a month earlier, but the sub-index for electronics/optoelectronics trended lower.
In the non-manufacturing sector, the CIER said, the sub-indexes for six major industries – hospitality/food/beverage, real estate/construction, finance/insurance, retail, transportation/warehousing and wholesale – pointed to an increase in November, CIER said.
In contrast, education and information/communication industries recorded a contraction in the month, the think tank said.
Source: Focus Taiwan News Channel