The official manufacturing purchasing managers’ index (PMI) held surprisingly strong at 53.1 last month, as inventory demand bolstered suppliers of electronics and optical products, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
However, firms were downbeat about business in the next six months, as the COVID-19 pandemic is spreading in Europe and the US, hurting demand for exports, the Taipei-based think tank said in a survey.
Last month’s PMI reading rose 0.4 percentage points from a month earlier, as firms in the electronics, transportation and biotechnology sectors reported an improvement in business, while those selling food products, machinery equipment and basic raw materials reported negative cyclical movements, it said.
PMI figures aim to gauge the health of the manufacturing industry with values above 50 suggesting an expansion and below indicating a contraction.
The PMI increase had a lot to do with the sub-index on delivery time, which rose to 65.9, as the coronavirus outbreak disrupted work in China and delayed shipment schedules, CIER vice president Wang Jiann-chyuan (王健全) said.
Supply chain disruptions loom larger as India, Malaysia, Mexico and many other countries are shutting down non-essential businesses to combat the disease, Wang said.
The reading for the six-month outlook plunged to 28.7, the worst since the launch of the PMI index in July 2012, Wang said.
Firms across all sectors shared a gloomy outlook, despite resilient PMI showings in the first quarter, CIER said.
The sub-indices on new business orders and export orders remained in positive territory, with readings of 50.1 and 51.2 respectively, it said.
The industrial production and employment sub-indices contracted to 49.5 and 49.2 respectively, as companies became concerned about raising headcounts, the survey said.
The non-manufacturing purchasing managers’ index rose from 40.4 a month earlier to 42.3, but remained in contraction territory, CIER said.
Restaurants and hotels have especially felt the pinch, as well as companies in the retail sales, logistics, warehouse and financial service sectors, the survey said.
Companies in the wholesale, education and construction sectors managed to post a modest increase, it said.
Although the government has introduced relief measures, recovery remains elusive for tourism-related industries, Wang said, adding that the gauge on service-oriented firms’ six-month business outlook tanked to a record low of 13.7.
Consumer spending might rebound once the number of confirmed COVID-19 cases plateaus, the economist said.
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