The nation’s official manufacturing purchasing managers’ index (PMI) fell to 50.4 last month, marginally above the neutral mark and down 8.6 points from January due to Lunar New Year holiday disruptions that would not likely evolve into an economic turnaround, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The economic bellwether, which aims to gauge the health of the local manufacturing industry, had expanded for 24 consecutive months as a stable global economy continues to benefit Taiwanese suppliers of electronic components, machinery tools and chemical products, the CIER report said.
“We stay cautiously optimistic about the domestic economy in light of the resilient PMI data,” CIER president Wu Chung-shu (吳中書) said.
PMI figures above 50 indicate business improvement, while values below the threshold suggest contraction.
Fewer working days last month — 13 versus 18 a year earlier — accounted for a drastic fall in the sub-index of new business from 60.9 to 44.1, the report found.
Most sectors saw a retreat in new business, except firms engaged in the supply of chemicals, biotechnology and medical products, as well as electronic components and machinery equipment, the report said.
The industrial output sub-index shrank from 61.2 to 37 as most firms suspended operations between Feb. 15 and Feb. 20 for the Lunar New Year.
The sub-index on new export orders also fell from 59.1 to 48.4.
However, manufacturers generally raised staffing levels, although at a slower pace, with the employment measure falling to 51.4 from 53.2 the previous month.
A positive business outlook allowed firms to increase their personnel, Wu said.
The sub-index on the six-month business outlook held steady at 65.7 as firms in all sectors voiced plans to add extra employees, the report said.
The nation could emerge unscathed from US President Donald Trump’s plan to impose hefty tariffs on steel and aluminum imports because the two product categories make up for only a tiny share of Taiwanese exports, Wu said.
The global economy holds a much greater sway on local PMI movements, he said.
However, inflationary pressures remained, as the sub-index on raw material prices fell to 74.9 from 79.2 the previous month, the report showed.
A separate report on the non-manufacturing index also reported a slowdown last month as it fell to 50.7 from 55.9 the previous month.
Hospitality, financial services and telecommunications providers reported a pickup in business, while retailers, wholesalers and property brokers experienced a decline, it said.
Most service-oriented companies are upbeat about their businesses, with the six-month outlook index rising from 55.0 to 57.3, the report showed.
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