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Manufacturing activity in expansion mode for 21st straight month

2017/12/01 20:42:42

Taipei, Dec. 1 (CNA) Manufacturing activity in Taiwan remained in expansion mode for the 21st consecutive month in November as Taiwanese manufacturers continued to benefit from a global recovery, the Chung-Hua Institution for Economic Research (CIER) said Friday.

In addition, activity in the local service sector saw its ninth consecutive month of expansion in November under favorable economic fundamentals at home and abroad, CIER said.

CIER, one of the leading economic think tanks in Taiwan, said the local purchasing managers index (PMI) for the manufacturing sector for November stood at 57.2, and while the latest figure was down 0.5 from the previous month, it remained above the 50 point mark, which indicates expansion mode, the CIER said.

The PMI has now remained in expansion mode 21 months in a row, beating the previous record from March 2013 to October 2014, CIER said.

In November, the non-manufacturing index (NMI) for November rose 0.4 from a month earlier to 53.4, pointing to expansion, the think tank said.

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

CIER President Wu Chung-shu (吳中書) said at a press conference that in addition to the longest expansion period for the local manufacturing sector, many firms remain upbeat about market prospects over the next six months, indicating the local economy is likely to keep growing at a steady pace.

Among the five factors in the November PMI, the sub-index for supplier deliveries and inventories moved higher, up 1.3 and 2.2, respectively, to 61.0 and 57.0 in November, CIER said.

However, the sub-indexes for new orders, production and employment for November fell 3.0, 0.2 and 2.8, respectively, to 55.6, 57.7 and 54.5, CIER added.

Of the six industries that make up the manufacturing sector in the CIER model, the sub-indexes for the chemicals/biotech sector, the electronics/optoelectronics sector and the transportation sector moved lower, but the sub-indexes for food/textile industries, the infrastructure/raw materials sector and the electricity/machinery sector trended higher, CIER said.

As for the service sector, the sub-index for business activity/production, new orders and employment rose 0.2, 1.2 and 1.3, respectively, from a month earlier, to 53.8, 54.3, and 52.7 in November, CIER said, adding that the sub-index for supplier deliveries fell 0.9 to 52.9.

In October, CIER raised its forecast for Taiwan's economic growth in 2018 to 2.20 percent from an earlier forecast of 2.15 percent.

However, Wu said the momentum of the economic growth will not be strong amid uncertainty in the global market.

Wu said several major central banks around the world have started an interest rate hike cycle, which will impact the capital market, while the global economy will remain plagued by geopolitical unease.

Despite such factors, a move by the government to push for infrastructure investments and a decision to raise wages for civil servants, teachers and military personnel from January is expected to lend support to the local economy, Wu said.

He said domestic demand is expected to play a bigger role in local economic growth next year.

(By Tsai Yi-chu and Frances Huang)