Taiwan PMI January 2016


Taiwan: Manufacturing PMI eases in January but remains above the 50-treshold

February 1, 2016

The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and Markit, fell from 51.7 in December to 50.6 in January. Taiwan’s Manufacturing PMI is still above the 50-threshold which separates contraction from expansion. January’s reading marks the third month since March 2015 that the Manufacturing PMI has come in above the 50-threshold.

According to Nikkei, January’s result reflected a marginal improvement for Taiwanese manufacturers as production, new orders and employment all expanded at slower rates in January compared to the previous month. Modest growth in new work enabled firms to cut back on their holdings of finished goods and inputs. New business rose in January even though data suggest that growth in new business was fueled primarily by stronger domestic demand. New exports orders fell slightly and client demand from key export markets remained largely muted. As client demand decreased, firms implemented stock readjustment policies, which contributed to dropping inventories of pre- and post-production goods.

Markit analysts added that, “Output and new business both rose only slightly in January, while firms continued to cut their stock holdings amid relatively muted client demand. The renewed fall in new export orders, albeit slight, was also disappointing, given the importance of export business to Taiwanese goods producers. “As we look ahead, the global slowdown may continue to act as a drag on the sector’s performance. However, deflationary pressures leave plenty of scope for stimulus measures to help boost the economy in 2016.”

FocusEconomics Consensus Forecast panelists expect investment to expand 2.2% this year, which is down 0.4 percentage points over last month’s forecast. For 2017, participants expect investment to increase 2.9%.

Author: Jean-Philippe Pourcelot, Economist

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Taiwan PMI Chart

Taiwan PMI January 2016

Note: Nikkei Taiwan Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Nikkei and Markit.

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