Financial and Technology News

LOOKING UP?Chung-Hua Institution for Economic Research president Wu Chung-shu said that the growth momentum might continue for the remainder of 2016.

The manufacturing purchasing managers’ index (PMI) reached 55 last month, the highest in 16 months, as local firms benefited from inventory-building demand from global technology giants, the Chung-Hua Institution for Economic Research (CIER) said yesterday.

In comparison the Nikkei Taiwan Manufacturing PMI reached 51.8, an 18-month high.

The data — which measures the pulse of the local manufacturing industry — suggest that the economy is on a stable track toward recovery, economists said.

CIER president Wu Chung-shu said that the pickup in PMI is most evident in the electronics and optical lens sectors at a time when Apple Inc is due to unveil its latest-generation iPhone series and other devices on Wednesday next week, while Taiwanese suppliers of chips, camera lenses, batteries, casings and other critical components have since June ramped up production to meet inventory demand.

“The growth momentum might last through this year, although it remains to be seen if the newest iPhone model can create a big splash as in the past,” Wu said.

The latest PMI scores lend support to a gradual recovery, with firms in almost all sectors upbeat about their business outlook for the next six months, Wu said.

Firms involved in supplying basic raw materials proved the only exception, weighed by volatile crude oil and commodity prices, he said.

PMI scores above 50 indicate expansion, while scores below 50 suggest contraction.

The sub-index on new orders increased from 54.2 in July to 57.3 last month, with most sectors receiving more orders, the CIER report said.

The sub-index on production stood at 57.3 last month, slowing 1 percentage point from July as inventory building came to an end in the absence of rush orders, Supply Management Institute in Taiwan executive director Steve Lai said.

“Excessive dependence on a single customer or product is not healthy for the industry,” Lai said, adding that manufacturers have increasingly shifted focus to markets elsewhere.

Non-manufacturing sectors last month also remained above the 50-point threshhold, with the non-manufacturing index last month at 52.5, down from 54.4 in July, CIER said in a separate report.

Despite robust activities last month, service-oriented firms were conservative about their business outlook, Wu said.

Companies in the real-estate and hospitality sectors have the gloomiest views, amid sluggish housing transactions and a sharp decline in Chinese tourists, he said.