The official manufacturing purchasing managers’ index (PMI) increased to 46.1 last month, from 45 in August, but still indicating further decline in operating conditions for industry due to slack demand from clients at home and abroad, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The grim results are consistent with a private PMI reading of 46.9 by Nikkei and Markit and suggests the slowdown has yet to bottom out, though the pace has eased slightly.
“The manufacturing industry has yet to come out of business deterioration, which could extend to the service sectors,” CIER president Wu Chung-shu (吳中書) said, as domestic demand is largely driven by exports.
The PMI is a leading indicator aimed at gauging the health of the manufacturing industry — with figures above 50 indicating expansion and below 50 signifying contraction — in light of new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Last month was the third consecutive of decline, with all constituent indices floundering in the contraction territory, the CIER survey found.
The sub-indices on new orders and production registered disappointing 45.8 and 46.8 respectively, as clients shied from building inventory for fear of a supply glut, the survey said.
Demand related to the launch of Apple Inc’s iPhone 6S has already been factored in and companies are cautious about sales moving forward, Wu said.
“The landscape is unlikely to brighten up in the absence of rush orders,” Wu said.
Apple on Monday said it had sold more than 13 million iPhone 6S and iPhone 6S Plus models over the weekend, better than any previous first weekend sales results, although some industry watchers attributed the strong sales momentum to inventory demand that might not be sustained.
The sub-index on employment stood at 48.4 last month, while the reading of supplier deliveries stood at 48, the survey said, adding that the gauge on inventories languished at 41.4.
The data all pointed to persistent destocking activities amid weak demand.
Annabel Fiddes, an economist at Markit that compiled the private PMI, said it is unlikely the sector would regain momentum this quarter, as the slowdown in China and the US constrain growth.
The latest PMI data rounded off a disappointing quarter for Taiwan’s manufacturing sector, which saw its worst performance in three years, Fiddes said in a statement.
“The data justifies the recent move by the central bank to cut interest rates to stimulate economic growth,” Fiddes said.
In a related development, the non-manufacturing industry fared weaker with the NMI falling to 45.3 last month, the lowest in the survey’s history, the CIER said.
Business contraction persisted for two straight months and plagued all non-manufacturing sectors, the think tank said.
Firms in both industries hold dim views about business prospects in the coming six months.
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