The purchasing managers’ index (PMI) dropped to 47.8 percent last month from 53.5 in January, weighed down by a drastic decline in new orders and production, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The Taipei-based think tank blamed the retreat squarely on fewer working days last month as a result of the Lunar New Year holiday and the three-day Peace Memorial Day weekend.
“Taiwanese manufacturers are generally positive about their business outlook,” CIER president Wu Chung-shu (吳中書) told a news conference.
PMI surveys aim to gauge the health of the manufacturing industry, with values above 50 indicating business expansion and scores below the threshold suggesting contraction.
The manufacturing industry is critical to Taiwan as the nation is home to the world’s top contract chipmakers, chip designers and laptop and smartphone vendors.
The subindex on new orders slowed to 45.3 last month, from 56.5 in January while the production reading slumped from 58.5 to 39.6, as holidays took out 10 working days, the CIER report said.
Employment stayed in contraction mood, with the index posting 47.7, down from 49.9 in January, as some manufacturers took advantage of the holiday to conduct annual maintenance, the report said.
Despite the poor readings, manufacturers showed more optimism about their business prospects.
The six-month business outlook index gained 3.3 percentage points to 618, the highest reading since August last year, the institute said.
Firms in chemical, biological, medical, transportation equipment and foods and textiles industry reported improved business, the report said.
Companies involved in optical products, basic materials and machinery equipment saw their business contract, it said.
Apple Inc’s launch yesterday of its Apple Watch in the US should benefit local technology firms in the company’s supply chain, analysts have said.
The non-manufacturing index (NMI) slowed to 50.8 last month, from 53.9 in January, with holiday distortions also cited for the retreat, the think tank said in a separate report.
CIER launched the survey in January in a bid to better capture the health of non-manufacturing industries, as Taiwan seeks to cut dependence on exports so the economy becomes less vulnerable to external shocks.
Firms in most service sectors recorded business and staffing increases, a trend that is more evident for hotels and restaurants, the report said.
However, companies in wholesale, education and retail sales reported declined business activity, the report said.
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