Manufacturing PMI inches down to 56

NON-MANUFACTURING MEASURE::The NMI last month shed 4.4 points from July, but stayed above 50, as companies expressed a dim view of the next six months

By Crystal Hsu  /  Staff reporter

Tue, Sep 04, 2018 - Page 12

Taiwan’s official manufacturing purchasing managers’ index (PMI) was 56 last month, down from 56.1 in July, suggesting continued improvement in operating conditions, although the pace has probably plateaued, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

While it has been in expansion territory for the past 29 months, the critical economic bellwether eased to its lowest level in 19 months as tariff rows raised uncertainty over the global economy, the Taipei-based think tank said.

“The global scene grows increasingly opaque, but might continue to expand for the rest of the year,” CIER president Wu Chung-shu (吳中書) told a media briefing.

PMI data aim to gauge the health of the local manufacturing industry, Taiwan’s main growth driver, with values larger than 50 indicating expansion and values below the threshold signaling contraction.

The sub-indices on new orders, industrial output and exports slipped marginally from a month earlier, but stayed comfortably in expansion mode, Wu said.

Taiwan is home to the world’s largest suppliers of semiconductors, electronic parts and components used in smartphones and laptops, as well as Internet of Things and artificial intelligence applications.

Global technology brands, including Apple Inc, are to unveil next-generation gadgets this month, ramping up business for firms in their global supply chains, analysts have said.

That explained why the employment sub-index gained 2.1 points to 54.7 last month, the PMI report found.

Meanwhile, raw material prices continued an uptrend, with the sub-index registering 65.6, while imported raw material volume held at 56, compared with 68.6 and 56 respectively a month earlier, it said.

Meanwhile, the private Nikkei Taiwan Manufacturing PMI reported a value of 53.

Annabel Fiddes, principle economist at IHS Markit, which compiles the Nikkei survey, said export sales rose for the 27th month in a row and at a solid pace, suggesting that external demand remained robust.

Other sub-index data hinted at the possibility of a growth slowdown in the months ahead, Fiddes said.

Firms are less optimistic about their business outlook for the next six to 12 months, weighed by the ongoing US-China trade dispute, both surveys found.

In related developments, the non-manufacturing index (NMI) last month stayed above the neutral threshold at 52.6, although it shed 4.4 points from a month earlier, the CIER said in a separate survey.

Despite continued improvement, firms in the hospitality, construction, financial and insurance sectors have a dim view of the six-month business outlook, the NMI report showed.