Taiwan’s purchasing managers index (PMI) slipped to an eight-month low of 45.2 last month, from 46.1 in July, as orders from both local and foreign buyers contracted simultaneously, a report by HSBC PLC said yesterday.
It is the third straight month the PMI has been below the 50 (“neutral”) mark. A PMI above 50 indicates an overall improvement in business conditions, while a lower PMI suggests deterioration.
The index, a bellwether of the manufacturing sector for the next three months, suggests the outlook is increasingly challenging.
“Softening demand at home and abroad is increasingly weighing on growth, given the island’s less diversified, heavily electronics-reliant exports structure,” Donna Kwok (郭浩庄), economist for Greater China at HSBC Asia, said in the report.
The new orders sub-index, an indicator of incoming new business from local and foreign buyers, fell to 41.7 last month, from 43 the previous month, the report said.
The new export orders sub--index fell to 39.8 from 44.7 during the same period, the first time it has fallen below 40 since January 2009, while still well above the trough of 14.9 in December 2008, the report said.
However, slowing external demand has yet to hinder Taiwan’s job market recovery, Kwok said, adding that last month’s employment sub-index rose above 50 for the first time in three months, to 50.5 from 49.6 a month ago.
The latest downturn in the PMI have been more reflective of the situation in the US than of Chinese demand, Kwok said, indicating that local manufacturers might benefit from Chinese demand amid the preferential trade tariff channels built by the Economic Cooperation Framework Agreement.
The inventory of finished goods sub-index rose to 48.7 last month, from 47.4 in July, the report said.
Meanwhile, due to higher raw material costs, the sub-index of input prices — surging to 56 from 48.7 a month earlier — rose above 50 for the first time in three months, the report said.
The output prices sub-index fell for the second straight month to register 49.5 last month, compared with 49.8 in July, it said.
“With the inflation picture still relatively under control, the central bank still retains some room to maneuver away from its gradual monetary normalization,” Kwok said.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable