Last month’s manufacturing purchasing managers’ index (PMI) posted its second consecutive decline to 55.3 from the 56.8 recorded in April, indicating weak momentum for economic recovery, a report by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) showed yesterday.
“The local economy is still heading toward recovery, albeit at a slower pace, as last month’s 55.3 was higher than the 50-point threshold,” CIER president Wu Chung-shu (吳中書) told a press conference.
The CIER’s PMI — a leading indicator of the nation’s economic outlook over the next three to six months — consists of five sub-indices: new orders, production, employment, inventories and supplier deliveries.
Last month’s results showed all five sub-indices expanded, but all except the subindex for inventories and supplier deliveries dropped from a month earlier.
The composite PMI reading for Taiwan’s six major industries — the chemical, bio-technology and medical sector, the basic raw material sector, the transportation sector, the electrical and mechanical sector, the food and textiles industry, and the electronic and optical industry — stood above 50 points last month, except the subindex for the basic raw material sector, reflecting the gloomy prospects of the local steel industry.
The subindex for the food and textiles industry dropped the most significantly, from 64.7 a month ago to 55.6, because many food products were found to contain maleic anhydride-modified industrial starch, the report said. New orders, production and employment in the food and textiles industry all dropped.
“It is still difficult to gauge the impact of the industrial starch [scandal] because we do not know how many companies are involved, but the influence might be more significant than that of the plasticizer in 2011, which only affected the beverage industry,” Wu said.
The subindex for the business sentiment over the future six months posted its third consecutive decline to 54.1 last month, reflecting that fewer companies are positive about the future, the report said.