The Manufacturing Purchasing Managers’ index (PMI) eased to 51.2 last month, from 54.1 in March, reflecting a slower rise in new business volumes as Europe struggles to curb fiscal debts and the US continues its tepid recovery, a report by HSBC PLC said yesterday.
The monthly PMI, used to gauge the health of the nation’s manufacturing sector, suggested Taiwan’s export-centric economy has not yet emerged from a slowdown mode.
“Global restocking activity continues to keep most Taiwanese manufacturers in business and their work force employed,” HSBC Greater China economist Donna Kwok (郭浩庄) said.
A PMI value above 50 indicates expansion and a lower reading suggests contraction.
Despite a third consecutive month of expansion, Taiwan remains in a slowdown mode as evidenced by marginal increases in new orders from international clients, the economist said.
Input prices rose last month ,with respondents citing higher raw material and petroleum costs as the main driver, the report said.
However, manufacturers reduced output prices at the request of clients amid intense competition for new business, the report said.
Output growth slowed a bit and outpaced that of new orders last month, while firms continued to accumulate backlogs of work as material shortages left some orders unfulfilled, the report said.
Stocks of finished goods increased at a marginal pace last month, the report said.
Employment recorded five straight months of expansion, but last month’s headcount marked the weakest since January, reflective of the moderate rise in production activity, the report said.
Kwok said she expects weak end-demand in the West, especially Europe, to constrain Taiwan’s export growth a while longer, making domestic demand an important growth driver to monitor.