The official purchasing managers’ index (PMI) dropped to 48.6 last month from 50.8 in June, suggesting a contraction for the local manufacturing industry due to soft demand from markets abroad, the monthly survey by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) showed yesterday.
The Nikkei Taiwan Manufacturing Purchasing Managers’ Index came to a similar conclusion of operating conditions further deteriorating across the sector.
“The slowdown trend is evident and solid, even though we do not like it,” CIER president Wu Chung-shu (吳中書) told a news conference.
The PMI last month was the lowest since February’s 47.8, ending four consecutive months of increase and bucking expectations of inventory-building into the second half.
A PMI score of less than 50 indicates business contraction, while values above the neutral mark suggest expansion. The Nikkei reading already signaled a fourth consecutive month of deterioration.
The critical subindex on new orders fell to 44.4 percent last month, the lowest since November 2012, as firms in the electronics and food production sectors reported business increases, while all others saw shrinking orders, the CIER report said.
Likewise, the new export subindex retreated to 41.2, with firms in all sectors recording negative cyclical movements, the report said.
Consequently, companies tempered output, pushing down the production subindex to 48.9, the CIER said.
The global slowdown bodes ominously for Taiwan, as exports drive more than 70 percent of its growth, Wu said.
There is little the nation can do to reverse weakening external demand, the academic said, although the government has encouraged local manufacturers to upgrade to cope with growing competition from rivals.
However, the employment subindex gained another 0.9 points to 52.9, the report said, consistent with expectations of business improvement ahead of the high sales season.
The head count increase was at variance with a dim view about business outlooks, the CIER report said.
Companies in all industries expect business to cool in the coming six months, driving the outlook subindex to 42.6, the weakest since December 2012 and 10.5 points lower from June, the report said.
Annabel Fiddes, an economist at Markit Ltd, which compiles the Nikkei figure, said the global economy remains a downside risk given the disappointing start to the third quarter.
Taiwanese manufacturers reported softer demand from clients in China, Europe and the US, Fiddes said.
In a related development, the non-manufacturing index gained 1.6 points to 52.1 last month, suggesting that firms in service sectors fared better than the manufacturing industry, the CIER said in a separate report.
Summer is a high sales season for restaurants and hotels, but traditionally brings slow sales for wholesalers, retailers, real-estate developers and property brokers, it said.
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
Elon Musk’s lieutenants have reached out to chip industry suppliers, including Applied Materials Inc, Tokyo Electron Ltd and Lam Research Corp, for his envisioned Terafab, early steps in an audacious and likely arduous attempt to break into the production of cutting-edge chips. Staff working for the joint venture between Tesla Inc and Space Exploration Technologies Corp (SpaceX) have sought price quotes and delivery times for an array of chipmaking gear, people familiar with the matter said. In past weeks, they’ve contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools, according to the people, who asked not to
Japan approved ￥631.5 billion (US$3.97 billion) in additional subsidies to hasten Rapidus Corp’s entry into the high-stakes artificial intelligence (AI) chipmaking arena, ramping up support for a project widely regarded as a long shot. The capital is intended to bankroll Rapidus’ work for information technology firm Fujitsu Ltd, one of the initial customers that Tokyo hopes would get the signature endeavor off the ground. The new money raises the fees and investments that the government is injecting into the start-up to ￥2.6 trillion by the end of the current fiscal year to March next year, the Japanese Ministry of Economy, Trade and
The founder of Chinese property giant Evergrande Group (恆大集團) has pleaded guilty to charges of fraud and bribery, a court said yesterday, the latest blow for what was once the country’s leading developer. Evergrande’s rise was propelled by decades of rapid urbanization and rising living standards, but in 2020, its access to credit dramatically narrowed when the government introduced curbs on excessive borrowing and speculation. The company defaulted in 2021 after struggling to repay creditors. Founder Xu Jiayin (許家印), 67, known as Hui Ka Yan in Cantonese, was reportedly held by police in 2023, with Evergrande saying he had been subjected to
RSS