Local manufacturing grew last month for the eighth successive month, although the figure grew at the slowest pace since March this year, according to a survey of purchasing managers released yesterday.
Last month’s reading of 51.6 was lower than the 52.6 posted in September, but remains higher than the threshold of 50 that separates contraction from expansion, the survey by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) showed.
The latest purchasing managers’ index (PMI) gained support through new orders, which is one the five major leading components of the gauge, as the subindex for new orders rose last month for the 12th consecutive month to 51.2, the institution said in the report.
However, the production subindex fell to 52.7 last month from 55.5 the previous month, as did the employment subindex, which dropped to 52.5 from 54.5. The institute said the weakening momentum showed by these two components — although they remained in expansion mode — were the main reason to drag down the PMI last month.
The subindex for supplier deliveries, another key PMI component, also slowed to 51.9 last month from 52.6 in August, while the inventories subindex continued contraction for the third straight month last month at 49.7, compared with 49.4 in September, according to the report.
The CIER’s monthly survey, also known as official PMI report, polls purchasing and supply managers among 250 manufacturing companies, and is seen by the market as providing a look at Taiwan’s manufacturing trends.
The latest report showed that manufacturers, especially those in the electronics and optical industries, were less optimistic about the future as the six-month outlook index fell below the threshold of 50 for the first time since December last year, registering a decrease of 3.7 percentage points to 47.3 last month from the September reading of 51.0.
Recent surveys by the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) already showed that more local manufacturers expressed bearish sentiment about the next six months, with TIER economists warning that the sector’s downbeat sentiment could continue into next year.
On Thursday, the government’s statistics agency said Taiwan’s economy grew at the slowest pace in a year in the July-to-September quarter with an annual rate of 1.58 percent, mainly attributed to weakening exports, after the economy expanded 2.49 percent the previous quarter.
However, the results of official PMI are in marked contrast to a monthly PMI issued yesterday by HSBC and compiled by Markit Group Ltd, which indicated that the nation’s manufacturing activity last month improved for the second month in a row and the pace of expansion in the sector had quickened from the previous month to reach the strongest level since March last year.
The HSBC’s PMI rose to 53.0 last month from 52.0 in September, boosted by growth of output and new orders amid reports of strengthened client demand at both home and abroad, the bank said in a statement.
“Taiwan is entering the final quarter of the year on a strong note. Improvements in output and new orders suggest that sequential growth will pick up,” HSBC economist Ronald Man (文略韜) said in the statement. “But without a meaningful increase in demand from China, the export-led recovery in Taiwan will unlikely be sustained,” he said.
Additional reporting by Amy Su