Taiwan PMI June 2016

Taiwan

Taiwan: Manufacturing PMI expands in June

July 1, 2016

The Manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and Markit, rebounded from May’s seven-month low of 48.5 to 50.5 in June. June’s reading marked the first time in three months that the Manufacturing PMI crossed the 50-point threshold that separates expansion from contraction in the sector.

According to Nikkei, June’s reading reflected an expansion in manufacturing output which more than offset a drop in total new work, which fell at a marginal rate. The less pronounced drop of new work is attributed to a stabilization of exports sales, which ended a streak of five consecutive contractions. Development of new products and filling of vacant jobs compelled Taiwanese manufacturers to increase staffing. Regarding price developments, input costs increased as prices for raw material increased. Despite higher costs, Taiwanese manufacturers did not increase prices due to increased competition.

Markit analysts added that, “soft client demand continues to act as a drag on the sector, which has generally struggled to expand for much of the past year-and-a-half. Although new export sales stabilized over the month, thereby ending a five-month period of decline, unless there is a meaningful upturn in customer demand companies may start to think about restricting output and staff numbers.”

FocusEconomics Consensus Forecast panelists expect investment to expand 1.0% this year, which is down 0.2 percentage points over last month’s forecast. For 2017, participants expect investment to increase 1.9%.


Author: Jean-Philippe Pourcelot, Economist

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Taiwan PMI June 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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