Tue, Jul 03, 2012 - Page 13 News List

PMI shrinks for third straight month: HSBC

By Amy Su  /  Staff reporter

Taiwan’s purchasing managers’ index (PMI) contracted for the third consecutive month to 49.2 points last month, from 50.5 in the previous month, a report by HSBC PLC said yesterday.

It also marked the first time since January that Taiwan’s manufacturing gauge fell below 50, HSBC data showed. A PMI reading above 50 indicates expansion, while a reading below 50 signifies a contraction.

“Exports look set to shrink at a faster pace this [second] quarter than in the first quarter,” Donna Kwok (郭浩庄), HSBC Asia’s economist for Greater China, said in the report.

With economies in the US and Asia still at risk of being infected by the global financial market’s volatility and China’s manufacturing slowing down, Kwok said the central bank’s caution in keeping interest rates unchanged at its most recent meeting looks justified.

The bank’s report showed that production contracted moderately last month, as new orders fell, with panel makers, for example, reporting a drop in orders from the US, China and Europe. Weaker domestic demand also contributed to the contraction.

Manufacturing work force numbers remained constant last month, following a contraction in May, although outstanding orders showed a moderate decrease, HSBC said.

Pricing pressures eased as input prices slid, the report said.

Output prices decreased to reflect lower input costs, which plummeted at their fastest pace since March 2009, the bank said. Competition among manufacturing firms also contributed to the drop.

Prices for raw materials and fuel continued to fall last month, lowering average costs for manufacturers, it said.

Manufacturers saw an increase in stocks of finished goods last month amid reports of shipment delays, but the rate of accumulation was unchanged from that in May, it said.

The report also showed that purchasing activity increased last month, extending the expansionary period to five months. However, the rate of growth was only slight and the lowest in the sequence, it said.

HSBC said approximately 20 percent of firms reported higher purchasing activity, compared with 19 percent of firms reporting a lower purchasing level.

Average lead time also improved last month for the third month, HSBC said. Given the weaker demand for inputs, suppliers reportedly were able to shorten delivery time.

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