The official manufacturing purchasing managers’ index (PMI) tumbled below the neutral threshold to 48 last month, as firms cut purchasing activity amid weak demand and held a dim view on the business outlook, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
It is the first time the economic barometer has fallen into contraction territory since April 2016 after Apple Inc slashed orders for its latest-generation iPhone series, the Taipei-based think tank said.
The fate of the new iPhones plays an important role in manufacturing activity because Taiwan is home to suppliers of iPhone chips, cameras, touch panels, casings and other components.
Lackluster iPhone sales prompted Apple to cut orders, CIER acting president Wang Jiann-chyuan (王健全) said, adding that Samsung Electronics Co’s models were also facing a lack of demand.
PMI readings aim to gauge the health of the manufacturing industry, with values above 50 indicating an expansion and scores below suggesting a contraction.
The critical sub-index on new business shed 3.6 points to 47.6 as firms in almost all sectors reported poor sales, except for those in the food and textile sectors, the report said.
Suppliers of electronic parts and transportation machinery suffered the most, with new business gauges of 39.4 and 37.5 respectively, it showed.
The output sub-index also took a downturn to 49.2, as did the measure on employment to 49.3, it said.
Meanwhile, the sub-index on new export orders dropped 5.5 points to 41.6.
US President Donald Trump’s remarks that Washington might extend its heavy tariffs to Apple products rubbed more salt in the wound, Wang said.
Firms were downbeat on their business prospects with the sub-index falling from 40.6 to 33.7, the report found.
The confidence reading could pick up this month after the US and China agreed to a truce on new tariffs, Wang said.
“The 90-day truce provides the world with some respite as evidenced by the rebound across global bourses,” Wang said.
A permanent solution depends on whether the US and China can iron out their difference during trade negotiations in the next three months, he said.
The operating condition is better for service-oriented sectors, with the non-manufacturing purchasing activity index (NMI) bouncing back into positive territory last month at 52.3, the report said.
The current quarter is the high sales season for the non-manufacturing industry, Wang said.
Firms in the retail, financial, media and communications sectors reported improved business, while companies in the wholesale, hospitality, warehouse and logistics sectors reported a weak outlook, the institute said.
The seasonal rebound could prove short-lived, as all sectors hold a negative view about their business prospects, it said.
The six-month outlook fell to 36.5 last month, from 36.1 a month earlier.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS