Against the backup of an improving business climate across the globe last month, the March purchasing managers' index (PMI) rose mildly from February by 0.5 to 48.8, the Chung-Hua Institution for Economic Research (CIER) reported Monday.
Although the index after seasonal adjustments has remained below 50 -- which represents a contraction -- for five consecutive months, the pace of contraction has slowed since December, CIER President Chen Shi-kuan said.
The PMI is based on data compiled from monthly replies to questionnaires sent to executives in about 300 representative manufacturing companies in five major areas: new orders, inventory levels, production, supplier deliveries and employment. A score above 50 indicates an expansion, a score below the threshold indicates a decline and a reading of 50 indicates no change.
According to Chen, the six-month outlook index in Taiwan's businesses concerning the domestic economy increased by 9.2 to 52.1 in March -- the first expansion since September. Most Taiwan manufacturers believe that market sentiment has gradually bottomed out, she noted.
Kamhon Kan director of Academia Sinica's Institute of Economics, said market sentiment sank to a low between late last year and early this year and it now appears that the worst is over.
As the global economy gradually rebounds, the domestic economy is expected to regain momentum in the second half, thanks to the efforts of Taiwan companies targeting promising areas such as 5G and Internet of Vehicles, he said.
Meanwhile, the non-manufacturing index (NMI) for the local services sector rose by 5.5 from the previous month to 53.3 in March, an expansion following two months of decline, according to the CIER.
Chen said that although hoteliers and construction and beverage companies surveyed said their business conditions have improved over the second half of last year, demand has not really spiked.
Meanwhile, the six-month outlook index in the non-manufacturing sector jumped by 2.9 to 48.7 in March -- the ninth monthly contraction, but the slowest contraction since July 2018.
Source: Focus Taiwan News Channel