The official manufacturing purchasing managers’ index (PMI) last month tumbled to 47.6, falling at the fastest pace in the survey’s history, as the COVID-19 pandemic diminished economic activity, but biotech and electronics suppliers benefited, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
Last month’s figure ended six straight months of increases and signaled a substantial deterioration in the health of the nation’s manufacturing sector, with companies unprecedentedly anxious about the future, it said.
PMI readings aim to capture the pulse of manufacturing activity, with values larger than 50 indicating an expansion and those lower than the threshold suggesting a contraction.
Photo: Tyrone Siu, Reuters
“The industry has emerged from concerns over supply chain disruptions after China resumed manufacturing activity, but fears loom over languid demand, if the eurozone, the US and some Asian markets remain closed to combat the virus,” CIER vice president Wang Jiann-chyuan (王健全) told an online news conference.
Should the pandemic persist in the second half of the year, it would deal a serious blow to Taiwan’s economy, which is heavily dependent on exports of electronics used in smartphones, laptops, tablets and other consumer gadgets.
The sub-index on new business orders shed 13 points to 37.1, while the industrial output gauge lost 9.3 points to 40.2, both slumping at the fastest rate since the survey’s launch in July 2017.
Firms reduced headcounts to cope with business declines, driving the employment measure down another 2.7 points to 46.5, the survey showed.
The sub-index on customers’ inventory rose 7.1 points to an overly high of 50.5, adding pressure to adjustment needs, CIER researcher Chen Shin-hui (陳馨蕙) said.
Fears of supply chain disruptions had prompted clients to build up inventory in previous months, he added.
In the meantime, the reading on delivery time stayed high at 63.8, as travel bans worldwide upset sea and air shipments, Chen said.
Firms’ forecasts are bleak, dragging the six-month outlook to a record low of 25.7, the survey found.
Not all sectors are suffering, as companies involved in the supply of healthcare and electronic products saw strong demand for personal protection equipment, as well as laptops and tablets, to accommodate remote learning and working, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.
Academia Sinica Institute of Economics director Kamhon Kan (簡錦漢) said that the height of the pandemic is likely over in Europe and the US, but nations might not return to normalcy before a vaccine is developed.
“People will keep some degree of social distancing, limiting the pace of economic recovery,” Kan said.
The situation is particularly unfavorable for service-focused companies.
The non-manufacturing PMI floundered low at 42.5 last month, with the six-month outlook printing 17.8.
BULK PURCHASE: The French chain and Hong Kong-based Dairy Farm International reached a deal covering 224 stores, which is expected to be finalized by year’s end Carrefour SA yesterday announced it would acquire Wellcome Taiwan Co (惠康百貨) for 97 million euros (US$108.33 million), and bring all the Wellcome supermarkets (頂好超市) and Jasons Market Place stores nationwide under its banner within 12 months of the deal closing. The France-based hypermarket chain reached an agreement with Hong Kong-based Dairy Farm International Holdings (牛奶國際控股), the pan-Asian retailer that launched Wellcome Taiwan in 1987. The transaction involves 199 Wellcome supermarkets, which have average sales areas of 420m2 and 25 high-end Jasons Market Place stores, which have an average sales area of 820m2, as well as a warehouse in Taoyuan, Carrefour Taiwan (家樂福)
‘ONE-STOP SHOP’: A Miaoli official said that the factory in the Jhunan section of the Hsinchu Science Park would create more than 1,000 jobs and boost prosperity A new high-end IC packaging and testing plant planned by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Miaoli County is expected to start operations in the middle of next year, Miaoli County Commissioner Hsu Yao-chang (徐耀昌) said. Hsu wrote on Facebook that TSMC, the world’s largest pure wafer foundry operator, would invest NT$303.2 billion (US$10.1 billion) to build the plant, the largest-ever single investment in Taiwan. However, TSMC declined to disclose the financial terms of the deal, while a company board meeting on May 12 approved a spending plan worth NT$168.2 billion as part of its investment plans. Construction of the
SCATTERED: Production would be dispersed among a number of countries, which would bring an end to so-called world factories, Hon Hai chairman Young Liu said Decentralized production would be the new focus in manufacturing, Hon Hai Precision Industry Co (鴻海精密) chairman Young Liu (劉揚偉) yesterday told an online forum held by the Market Intelligence & Consulting Institute (MIC, 產業情報研究所). “The COVID-19 pandemic exerted a heavy impact on supply chains as well as production ... [production] would no longer be concentrated in solely one country, this is the end of what we used to call world factories,” Liu said during a panel discussion hosted by MIC director Victor Tsan (詹文男). As the US and China continue to dominate and sway international relations, the rest of the world is
PLANNED OUT: The government is lifting sale and export restrictions on 60% of the 20 million masks made daily, but people can still make purchases using their NHI cards Twenty thousand boxes of 50 masks each would be on sale at FamilyMart convenience stores starting tomorrow, Taiwan FamilyMart Co Ltd (全家便利商店) said yesterday. A box of 50 masks would cost NT$249 for those with FamilyMart memberships and NT$299 for those without, with no limits placed on how many boxes a person can buy, the company said. Convenience store chain operator Hi-Life International Co Ltd (萊爾富) said that it would also start selling masks from tomorrow. It has yet to announce details about prices and quantity. Hypermarket chain operator Carrefour Taiwan (家樂福) said that it would start selling packs of five