The manufacturing purchasing managers’ index (PMI) remained depressed last month due to the effects of the US-China trade dispute, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday, adding that companies are likely to remain cautious, despite the two global giants planning to restart trade talks.
The index, which aims to capture the pulse of the nation’s manufacturing industry, came in at 48.1, little changed from 48.2 one month earlier, the Taipei-based think tank said.
Scores larger than 50 indicate expansion while those lower signify a contraction.
“Uncertainty lingers as the truce suggests a respite from, not an end, to the trade dispute between the US and China,” CIER president Chen Shi-kuan (陳思寬) said at a press conference in Taipei.
Raw material suppliers fared the worst with a reading of 42.8, followed by transportation equipment providers with 44.3 and machinery equipment vendors with 47.1, the survey showed.
The sub-index on raw material prices slid from 43.7 to 40.7, as clients stayed on the sidelines, the institute said.
Makers of electronics, food and textiles, as well as chemical and biochemical products managed to stay above the neutral mark, the survey found.
US President Donald Trump on Saturday agreed at the G20 summit in Osaka, Japan, with Chinese President Xi Jinping (習近平) not to raise tariffs on US$350 billion of Chinese goods, including smartphones and laptops, after Beijing agreed to buy more US agricultural products.
The US and China account for more than 50 percent of Taiwanese exports, mainly electronics.
Global tech brands normally ramp up orders for local firms ahead of next-generation product launches in September.
However, most Taiwanese firms expect business in the next six months to remain soft, with the sub-index falling from 48.5 to 42.9, the survey showed.
Companies in almost all sectors hold a dim view of prospects, except for those engaged in the chemicals and biomedical fields, it found.
Sentiment remained bleak, although the sub-index on new business orders improved from 47.5 to 48.7, while industrial production rose from 46.5 to 49.7.
The sub-index on export orders weakened slightly from 49.7 to 48.1, according to the institute.
The latest readings continued to reflect negative cyclical movements, although the pace of decline had slowed, Chen said.
The government should proceed with stimulus measures to support domestic demand and ease the pain of poor exports, CIER vice president Wang Jiann-chyuan (王健全) said.
“Otherwise, GDP growth for this year might be hard pressed to reach 2 percent,” Wang said.
The non-manufacturing purchasing managers’ index slowed from 54 to 52, thanks to the arrival of the high season for consumer spending, Chen said.
Despite the positive reading, service-oriented firms expressed misgivings about business in the next six months, the survey found.
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