Tue, Sep 03, 2019 - Page 12 News List

Manufacturing PMI increases to 48.2

LEARNING CURVE:While operating conditions seem to have stalled for major sectors, companies have become better at factoring in risks, CIER president Chen Shi-kuan said

By Crystal Hsu  /  Staff reporter

Last month’s manufacturing purchasing managers’ index (PMI) increased slightly to 48.2 from July’s 48, as technology firms benefited from upcoming releases of new-generation devices, but other sectors floundered amid a global slowdown, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

“Although the US and China exchanged tariff hikes last month, local firms are more prepared as they have moved production lines out of China and adjusted procurement strategies,” CIER president Chen Shi-kuan (陳思寬) said.

Taiwan is home to the world’s largest makers of chips, camera lenses, and components used in smartphones, laptops and other consumer electronics.

The PMI has hovered at about 48 in the past few months, suggesting that operating conditions have stalled for major sectors, Chen said.

The PMI aims to gauge the health of the manufacturing industry, with scores greater than 50 indicating expansion and scores below signaling contraction.

The US-China trade dispute has lasted more than a year, and with no end in sight, firms have factored in potential risks, she said.

Firms “are now less shocked by unfavorable twists,” Chen said.

The sub-index for new business orders increased marginally from 48.2 to 48.9, while the industrial production reading rose from 50.3 to 51.7, the Taipei-based think tank’s monthly survey found.

The sub-index on new export orders climbed from 46.8 to 47.4, while the customers’ inventory sub-index increased from 44.6 to 46.7, the survey showed.

Apple Inc, Huawei Technologies Co (華為) and Samsung Electronics Co are to launch new smartphones and notebook computers later this month to spur replacement demand, increasing business opportunities for local firms in their supply chains.

A 15 percent US tariff hike went into effect this month on Apple earphones, smart speakers and wrist watches imported from China, Chen said, adding that it would take a little time to see the effect on sales.

The tariffs are to be extended to smartphones and laptops in December.

That probably explains why the six-month outlook for business prospects weakened from 49.3 to 44.5, she said.

Sentiment is bleakest among firms selling machinery equipment and raw materials, the survey showed.

Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said that pessimism would spread to downstream firms.

The non-manufacturing index registered 53.1, comfortably in the expansion range, despite a slight decline from July, the survey showed.

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