The HSBC Taiwan purchasing managers’ index (PMI) wobbled to 44.5 last month from 45.2 in August, staying below the neutral mark for the fourth straight month as companies at home and abroad cut orders amid a dimming economic outlook, a report said yesterday.
The latest PMI reading reflected heightening downside risks in the West and suggested the correction would persist, albeit at a milder pace, the report said.
“Incoming new business flows from local and foreign buyers declined faster in September than in August,” said Donna Kwok (郭浩庄), an economist at HSBC Asia. “We expect the decline to continue until Western demand and China’s manufacturing activity pick up.”
A PMI value above 50 indicates expansion, while a smaller reading suggests contraction. Last month’s score dropped to a nine-month low, boding ill for industrial output and exports in upcoming months.
The overall new orders sub-index cooled to 41 last month, from 41.7 a month earlier, while new export orders inched up to 41.1 from 39.8, as firms continued to exercise caution amid market volatility, the report said.
Slower new business inflows, in turn, dragged the output sub-index down further to 41.3, from 42.3, the report said.
The readings remained high above the values recorded during the global financial crisis of 2008 and 2009, Kwok said, implying that Taiwan’s export-reliant economy was faring better this time as the world staggers closer toward a double-dip recession.
Job market recovery has yet to be dislodged by the ongoing technology correction cycle, with the employment sub-index improving to 51.1 last month, from 50.4 in August, the report said.
Kwok said the labor market displayed a higher degree of resilience than in 2008 even though the improvement was marginal.
Inflationary pressures eased further amid softening demand as the input sub-index decelerated to 53.7 last month, from 56 one month earlier, while the output price reading slowed to 49.3 from 49.5, the report said.
“With inflationary pressures under control, we remain comfortable in our expectations for the central bank to keep the benchmark discount rate unchanged at 1.875 percent until mid-2012,” Kwok said.
However, consumers and governments in the US and Europe are set to deleverage as the sovereignty crisis unfolds, weakening demand for consumer electronics, which contributed much to Taiwan’s GDP growth in the first half, the Hong Kong-based economist said.
China, the nation’s largest export destination, will help mitigate some, but not all of the negative impact, she said.
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Shin Kong Financial Holding Co (新光金控) yesterday said that its insurance unit would adjust its investment portfolio after being banned from buying new stocks a day earlier by the Financial Supervisory Commission (FSC). “We will research what we can do based on the commission’s specific instructions after we receive the regulator’s formal documents,” Shin Kong Financial spokesman Sunny Hsu (徐順鋆) told the Taipei Times by telephone. The commission on Tuesday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$941,722) for reckless investment, and demanded that the insurer reduce its overseas investment ratio from 43 percent to 39 percent. The fine would affect
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to
EQUITIES TAIEX moves sharply higher The TAIEX moved sharply higher yesterday as buying focused on Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) after a strong showing by its American Depositary Receipts overnight. However, the gains were capped after the benchmark index breached 13,000 points and ran into technical hurdles, prompting investors to turn cautious, dealers said. At the end of the session, the TAIEX was up 131.11 points, or 1.02 percent, at 12,976.76. Turnover was NT$206.328 billion (US$7.04 billion), with foreign institutional investors buying a net NT$18.47 billion in shares, Taiwan Stock Exchange data showed. TSMC rose 2.92 percent to close at NT$458.