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What industries are covered by the purchasing managers' survey? What is the index compilation method?

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1. Survey Scope

Taiwan Purchasing Managers' Index, PMI is compiled in reference to the approach of the U.S. Institute for Supply Management, ISM. In addition, according to the domestic economic characteristics, a sample survey was conducted. In particular, the manufacturing sector is subdivided into six industries, including Electronic and Optical industry, Basic Materials industry, Electrical and Machinery Equipment industry, Chemical and Biological & Medical industry, Foods and Textiles industry, and Transportation Equipment industry; the non-manufacturing sector is divided into nine industries, including Construction and Real Estate industry, Wholesale Trade industry, Retail Trade industry, Education, Professional, Scientific & Technical Activities industry, Financial and Insurance industry, Information, Communication and Broadcasting industry, Transportation and Storage industry, Accommodation and Food Service industry, and other non-manufacturing industries.

2. Index compilation Method

The monthly survey of manufacturing consists of 14 questions; the non-manufacturing consists of 12 questions. The respondents answered each question by comparing with the previous month and placed a check on “increased”, “unchanged” or “decreased” in the questionnaire. The calculation method is briefed below:

(1) The diffusion index of each item is first calculated. Take the new orders index as an example:

New orders index=P1 +P2×0.5 +P3×0

Whereas, P1: The percentage of answers for “increased”

                                  P2: The percentage of answers for “unchanged”

                                 P3: The percentage of answers for “decreased”

In each industry, the respondent companies were given the same weight. Based on the calculation method above, the respective Diffusion Indexes of the industry are calculated.

(2) Calculate the index for each industry category:

After calculating the diffusion index of each item in all industry, the industrial PMI/NMI is calculated.

Industrial PMI under manufacturing=New Orders of the industry ×0.2+Production of the industry×0.2+Employment of the industry ×0.2+Supplier deliveries of the industry×0.2+Inventories of the industry×0.2

Industrial NMI under non-manufacturing=Business Activity of the industry×0.25+New Orders of the industry×0.25+Employment of the industry ×0.25+Supplier deliveries of the indsutry×0.25

 (3) The indexes of the industry categories are composed into manufacturing PMI and non-manufacturing NMI:

After calculating the indexes for the industry categories, the manufacturing PMI is calculated by computing the weighted average of the ratios of the six industries in the manufacturing nominal GDP; the NMI of non-manufacturing is calculated by computing the weighted average of the ratios of the nine industries in the manufacturing nominal GDP.

 

 

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