Taipei, Aug. 1 (CNA) Activity in Taiwan's manufacturing and service sectors showed signs of accelerating in July, with the indexes gauging the two sectors' climate moving higher, according to a report released by Chung-Hua Institution for Economic Research (CIER) Tuesday.
The improvement in both sectors shows that Taiwan's economy remains on the road to recovery and there are no signs of it slowing down after a recent expansion, according to CIER.
The monthly report of CIER, one of Taiwan's leading economic think tanks, shows that the manufacturing sector's purchasing managers index (PMI) for July rose 1.4 points from a month earlier to 59.0 after a slower pace in expansion for the previous three month.
The non-manufacturing index (NMI) for the service sector for July also rose 1.8 points from a month earlier to 54.8, marking the fifth consecutive month of expansion.
PMI and NMI readings above 50 indicate expansion, while a reading below 50 represents contraction.
CIER President Wu Chung-shu said that the growing PMI largely reflected an improvement in warehousing, transportation and wholesale business, while the electronics and optoelectronics industries continued to benefit from rising global demand.
The local service sector appeared to grow at a faster pace than the manufacturing sector, based on the higher growth in the NMI than the PMI.
CIER is one of the local think tanks to raise its forecast for Taiwan's gross domestic product (GDP) growth for 2017 to more than 2 percent, compared with a 1.5 percent increase seen in 2016.
The Directorate General of Budget, Accounting and Statistics (DGBAS) has also upgraded its forecast for Taiwan's 2017 GDP growth to 2.05 percent from an earlier estimate of 1.92 percent. For its part, CIER has forecast that Taiwan's economy will grow 2.14 percent this year.
Wu said that although the DGBAS and CIER have forecast that the pace of Taiwan's GDP growth for the second half of this year will be slower due to a relatively high comparison base over the same period of last year, the latest PMI and NMI indicate that the growth pace is expected to remain stable.
Among the five factors in the July PMI, the sub-index for new orders, production and inventories rose 2.9, 4.5 and 0.8, respectively, from a month earlier to 61.2, 61.8 and 55.7 percent, while the sub-indexes for employment and suppliers' deliveries fell 0.8 and 0.5, respectively, to 57.8 and 58.5, according to CIER.
Among the six industries that make up the manufacturing sector in the CIER model, only the sub-index for transportation moved lower, while the other five -- infrastructure/raw materials, food/textiles, electronics/optoelectronics, chemicals/biotech and electricity/machinery trended higher, the CIER report shows.
As for the NMI, only one of the four factors -- suppliers' deliveries -- fell 0.6 points from a month earlier to 52.8 in July, while three others -- business activity/production, new orders and employment -- rose 2.1, 3.6 and 2.3, respectively, to 54.8, 57.2 and 54.5, it adds.
