Tue, Nov 06, 2018 - Page 12 News List

PMI growth slowest since 2016: CIER

ADJUSTMENTS:Order visibility would decline as the dispute between the US and China continues, with new-business orders falling, CIER acting president Wang Jiann-chyuan said

By Crystal Hsu  /  Staff reporter

The official manufacturing purchasing managers’ index (PMI) fell to 51.8 last month, the slowest pace of expansion since May 2016, with operating conditions resilient for some sectors, but turning sour for others, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

While it remained above the neutral threshold of 50 for the 30th consecutive month, PMI is losing steam amid increasing global economic uncertainty, which is eroding corporate confidence, CIER said.

PMI data aim to capture the strength of the local manufacturing industry, with values above 50 indicating expansion and those below suggesting contraction.

“Order visibility declined among local firms as trade disputes between the US and China carry on,” CIER acting president Wang Jiann-chyuan (王健全) told a media briefing.

The world’s two largest economies account for about half of Taiwan’s outbound shipments.

The critical sub-index on new-business orders fell 4 points to 51.2, with suppliers of electronic and optical parts posting marginal pickups and other sectors reporting significant retreats, the PMI report showed.

Order decline is most evident for raw-material vendors, with a new-business reading of 38.4 as international oil and raw material prices took a downturn, the report showed.

Price corrections drove firms to adopt a wait-and-see attitude for fear of continued downward adjustments, Wang said, adding that the sub-index on input prices slid to 47.1 from 48.7 a month earlier.

The conservative attitude would bring opacity to order visibility and encourage inventory adjustments, he said.

“The cycle is unfavorable for business activity and bound to drag down PMI data moving forward,” Wang said.

The sub-index on industrial output rose from 54.9 to 56.1, while the reading on employment stayed above neutral at 50.3, but down from 52.6 a month earlier, the report said.

The high-sales season for technology products allowed firms to ramp up production, it said.

Firms are gloomy about business prospects, with the six-month outlook index shrinking from 47.6 to 40.6, it said, adding that all sectors shared the downbeat sentiment.

The landscape could turn around if the US and China iron out their differences, Wang said.

The nation’s economy could also reap benefits if Taiwanese companies based in China move back, Wang said.

The operating condition was weak for non-manufacturing sectors, retreating to 49.9 from 50.8 a month earlier, weighed by sluggish business at hospitality, warehousing and logistics operators, a separate report showed.

It is the first contraction for service-oriented firms since March last year and firms expect the situation to deteriorate in the coming six months, it said.

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