Taiwan: Manufacturing PMI expands in December; crosses the 50-threshold for the first time in ten months
January 4, 2016
The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and Markit, rose from 49.5 in November to 51.7 in December, marking a ten-month high. Taiwan Manufacturing PMI is now above the 50-threshold which separates contraction from expansion. December’s reading marks the first time since March 2015 that the Manufacturing PMI crossed into expansionary territory.
According to Nikkei, December’s result came on the back of an increase in both output and new orders. In fact, both increased for the first time in nine months. Higher output contributed to a renewed increase in purchasing activity and staffing by firms, which led to employment hitting a five-month high as volume of new work increased. Furthermore, the backlog of work increased for the first time since March. Meanwhile, deflationary pressures intensified and led to a drop in input costs, which forced companies to reduce their selling prices.
Markit analysts added that, “Taiwan’s Manufacturing PMI pointed to the first improvement in overall business conditions since March, with output and total new work indices both returning to growth territory at the end of the year. However, the data suggest that improved domestic demand led the growth recovery, as new export orders were little-changed from the previous month […] The data also show that deflationary pressures intensified at the end of 2015, suggesting that overall demand conditions remain relatively subdued. This gives plenty of scope for any further loosening of monetary policy that might take place as the global economic outlook, particularly for China, remains shrouded in uncertainty.”