While the Taiwanese manufacturing sector posted solid growth last month, the pace of expansion slowed for a third consecutive month and was the weakest since June last year, a survey by HSBC said yesterday.
The purchasing managers’ index, which provides a single-figure snapshot of the health of the manufacturing sector, fell to 53.8 points last month, down from May’s reading of 57.4, reflecting a slower rise in incoming business received by manufacturers.
“After surging output over the first five months of the year, the growth of Taiwan’s economy is starting to cool,” Frederic Neumann, senior Asian economist with HSBC, said in a statement.
New orders received by manufacturers in Taiwan increased by a solid amount last month, and yet the rate of new business growth slowed for a fourth successive month from the high recorded in February, and was the lowest since April last year, the survey said.
“This [subdued economic growth], however, does not necessarily signal a hard landing. New export orders are still growing at a decent pace and job growth was broadly unchanged since May,” Neumann said.
The sustained growth in new orders supported a further increase in output, the report said, adding that delays in the delivery of some materials drove a further rise in backlogs and input costs rising again, albeit at a much weaker rate than in May.
Reflective of sustained increases in new orders and output, local employment in the manufacturing sector increased for a twelfth consecutive month.
“Despite the marked easing in new order growth, the rate at which staffing levels rose was broadly unchanged since May,” the report said.
The survey also found that backlogs of work rose for a 15th successive month last month, while stocks of finished goods fell for a second consecutive month as manufacturers utilized inventories to fulfill new order obligations.
Input prices faced by manufacturers increased substantially last month, but the rate of input cost inflation slowed since May, suggesting that the prices of some metals had actually declined, the report said.
“Price pressures are easing again, if from an elevated pace, suggesting that recent rate hikes are aimed more at bubbly property prices rather than inflation risks,” Nuemann said.
Despite the sustained rise in input costs, the report said that purchasing activity increased further last month. In line with a slower rise in output, growth in input buying eased since May.
Delivery times also continued to lengthen, reflecting both higher purchasing activity and shortages of certain materials, it said.
Separately, the nation’s property market flashed a recessionary “yellow-blue” light last month after a stable “green” light in the previous three months, the Chinese-language Housing Monthly’s survey showed yesterday.
That shows that the central bank’s property curbing measures have succeeded in cooling off buying activities, the monthly said in a statement.
Fewer home shoppers and conservative land developers, who have retreated to a wait-and-see approach, pushed the indicator’s score down by 5 points month-on-month to 40 last month, it said.
Additional reporting by Joyce Huang
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