The official purchasing managers’ index (PMI) declined further to 50.8 last month, from 51.1 in May, as manufacturers of basic materials, textiles and electrical equipment reported business softening, while data suggested that sentiment in some other sectors might be picking up, a Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) survey showed yesterday.
Manufacturers in other sectors generally fared weaker than expected in terms of earning results, but see business improving over the rest of the year, the survey showed.
The PMI reading, which aims to gauge the health of the manufacturing industry, barely indicated expansion last month, with the increase being the slowest in four months, CIER president Wu Chung-shu (吳中書) told a news conference.
A PMI value above 50 indicates business expansion, while scores below the threshold suggest contraction.
Of the component measures, new business orders gained 1.7 percentage points to 50.8 and output eased to 52.3, the survey said.
The employment sub-index grew 1 percentage point to 52 and the reading on delivery times contracted to 49.3, the survey said.
Volatility in commodity prices widened last month, driving firms to delay building inventories, Wu said.
Sub-indices on new export orders, order backlogs and material imports were all below the threshold, suggesting slack demand going forward, the survey found.
However, the gauge on business outlook rose slightly to 53.1, up from 52.7, indicating companies are generally positive about sales improving in the next six months.
Companies in the transportation, food, electronics and biochemical sectors are generally upbeat about growth momentum going forward, while firms involved in producing basic materials and electrical equipment expect business to deteriorate, the survey said.
For the first six months, manufacturers recorded lower sales and profits compared with the second half of last year but they increased payrolls and raised salaries, the report said.
The situation might brighten up from this quarter, with 48.4 percent of firms predicting better sales and 33.5 percent forecasting higher profits, Wu said.
The non-manufacturing index dropped to 50.5 last month from 54.8 in May.
The summer vacation is high season for restaurants and hotels, but ushers in low sales for wholesalers and real-estate developers.
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