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.
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