The official Purchasing Managers’ Index (PMI) declined to 49.2 last month from 51.5 in October, as manufacturers saw a slowdown in business amid a lackluster global economy, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said.
It is the first contraction since December 2012, with almost all subindices falling below the neutral threshold as inventory-building demand linked to Apple Inc’s new handsets softened, CIER president Wu Chung-shu (吳中書) told a news conference.
“The latest PMI value suggests a slowdown in the domestic economy, instead of a downturn due to a lack of seasonal adjustment,” Wu said.
Disappointing economic performance in Europe, China and Japan accounted for the slack growth momentum, although the US performed above par, the economist said.
The monthly PMI survey is used to gauge the health of the nation’s manufacturing industry, with scores above 50 indicating expansion and values below that mark suggesting contraction.
Manufacturers in electronic, chemical, optical and biotechnology sectors all slipped into contraction after orders linked to the popular iPhone 6 smartphone series peaked in the first half of the year, Wu said.
The subindex on new orders eased to 47 last month, from 50.3 in October, while the subindex on exports slid from 50.2 to 47.2, the survey found.
However, food makers and machinery suppliers reported growing business last month, due to the advent of the high season for the former and a sustained, global competitive edge for the latter, Wu said.
The subindices on employment and inventories remained in expansion territory at 50.1 and 51.7 respectively last month, reflecting firms’ cautious optimism for their business outlooks, CIER researcher Chen Shin-hui (陳馨蕙) said.
The business slowdown might last for a while, but could resume trending up early next year, as Apple’s rivals launch new devices, Supply Management Institute Taiwan executive director Steve Lai (賴樹鑫) said.
“Some handset suppliers have avoided launches of new devices this year for fear of being upstaged by the iPhone 6,” Lai said.
The Lunar New Year holiday in February next year could also lend support to businesses, he added.
The traditional concept of seasonality is losing relevance in capturing business pulses among technology firms, while the introduction of new devices gains increasing importance, Lai said.
British banking group HSBC PLC reached similar findings, with its HSBC Taiwan Manufacturing PMI showing 51.4 last month, down from 52 in October and the slowest rate of growth in 15 months.
“The current slowdown in growth momentum, which started in the third quarter, has deepened this quarter,” HSBC economist in Asia John Zhu (朱日平) said.
The slight increase in hiring and fall in input prices might not provide much respite in the short run, Zhu said.
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