The HSBC purchasing managers’ index (PMI) for Taiwan contracted for the third straight month to the lowest level this year at 46.1 last month, from 47.5 in July, as the slowdown in manufacturing activity deepened, the British banking group said in a report yesterday.
The deterioration in external conditions has started to spill over and affected domestic demand, HSBC Greater China economist Donna Kwok (郭浩庄) said in the report, pointing to the steeper decline in new orders than in new export orders.
The sub-index on overall new orders — indicative of both domestic and external demand — dropped by 2.8 points to 44.4 last month, from 47.2 in July, the report said.
The sub-index on new export orders declined by 1.2 points to 43.6 from 44.8, the report showed.
Both indices have contracted for a quarter now to their lowest value since December last year, consistent with the eurozone’s worsening contraction and China’s sluggish recovery, Kwok said.
The PMI reading is a leading indicator of the manufacturing industry’s health, with a reading above 50 indicating expansion and a score lower than the threshold suggesting contraction.
Stocks of finished goods and purchases remained in negative territory at 48.2 and 47.8 respectively last month, although both edged up from 46.9 and 47 one month earlier, suggesting that destocking pressure is not yet at play, Kwok said.
However, inventory readings will start to climb again in a few months, if final demand does not recover before long, either at home or overseas, she said.
The sub-index on employment, a gauge that has a critical bearing on consumer confidence and domestic demand, deteriorated from a month earlier to 49.4 last month, though the pace of contraction moderated from 48.5 in July, the report said.
Figures released by the Council of Labor Affairs showed that as of the end of last month, the number of workers on unpaid leave increased by 58 from Aug. 15 to 650 after three more companies adopted the measure to cope with shrinking business.
“As manufacturers account for a sizable 27 percent of jobs in Taiwan, softening employment puts domestic consumption in a more vulnerable state than during the technical recession in second half of last year,” Kwok said.
The sub-index on input prices declined to 46 last month, from 38.1 in July, on the back of weak demand and falling metal and raw material prices, the report said.
A tough competitive environment saw firms cut final output prices for the fifth straight month, keeping the output price sub-index below 50 at 46.1 last month, from 45.6 in July, the report said.
HSBC expects input prices to trend up before the year is over, as rising global energy prices start to filter through, the report said.
Firms will hesitate to pass on higher input cost burdens to customers due to sharp competition, helping to keep the overall inflation modest and allowing the central bank to hold interest rates steady later this month, Kwok said.
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
TikTok abounds with viral videos accusing prestigious brands of secretly manufacturing luxury goods in China so they can be sold at cut prices. However, while these “revelations” are spurious, behind them lurks a well-oiled machine for selling counterfeit goods that is making the most of the confusion surrounding trade tariffs. Chinese content creators who portray themselves as workers or subcontractors in the luxury goods business claim that Beijing has lifted confidentiality clauses on local subcontractors as a way to respond to the huge hike in customs duties imposed on China by US President Donald Trump. They say this Chinese decision, of which Agence