A deepening economic slowdown pushed the official manufacturing purchasing managers’ index (PMI) down to 45 last month, from 48.6 in July, marking the lowest level in the survey’s history, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
Bearish sentiment has spread to the service sectors, with the institute’s non-manufacturing index (NMI) hitting 47.5 last month, sliding into the contraction zone for the first time since the Taipei-based CIER launched the survey in August last year, indicating that domestic demand-driven companies also started to feel the pinch.
The PMI is a composite indicator seeking to gauge the health of the local manufacturing sector in light of new orders, output, employment, suppliers’ delivery times and stocks of purchases.
A PMI figure greater than 50 indicates improvement of the sector’s operating conditions, while a value below the neutral mark suggests deterioration.
“The operating conditions of local companies in different sectors deteriorated last month as global demand softened and financial market volatility helped feed caution,” CIER president Wu Chung-shu (吳中書) told a news conference.
The manufacturing industry, a major player in the nation’s export-reliant economy, is likely to slip into recession if the PMI stays in contraction mode for six months, Wu said.
Protracted low PMI values would likely drive the overall economy into recession, as Taiwan is home to the world’s top contract chipmakers and chip designers, laptop and smartphone vendors, as well as critical electronics component suppliers, he added.
The CIER said that the index’s five subindices showed a contraction last month, with new orders declining to 39.9, the lowest since the institute initiated the survey in July 2012.
Wu attributed the poor performance to clients’ intentions to cut inventories rather than placing new orders on fears of oversupply.
Among local manufacturing sectors, food makers proved the only exception, unaffected by the downturn thus far, the monthly CIER report found.
The production subindex tumbled to 43.9 last month, down 5 points from a month earlier, the report said.
Supply Management Institute in Taiwan (SMIT, 中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said it is important to watch the market’s response to Apple Inc’s latest iPhone models, scheduled to be introduced on Wednesday next week, as many Taiwanese technology firms are part of the US company’s supply chain.
“A poor reception would dim the exports outlook for next quarter, the traditional high sales season for technology devices,” Lai said.
Companies in the service sector, which tend to lag behind manufacturers in adapting to changes in economic conditions, started to share a cautious outlook last month, CIER researcher Chen Shin-hui (陳馨蕙) said.
Firms in financial services, transportation, logistics, wholesale and property construction saw business contracting last month and expected the landscape to darken going forward, Chen said.
That means private consumption might not lend support to GDP growth as projected by the official statistics agency, the survey indicated.
Last month, the government lowered its GDP growth forecast to 1.56 percent for this year, compared with the 3.28 percent it previously estimated.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
RSS