The COVID-19 pandemic last month continued to weigh on business across nearly all sectors, dragging the official manufacturing purchasing managers’ index (PMI) to a record low, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The PMI shed 2.8 points to 44.8, the worst showing since the launch of the survey in July 2012, as all manufacturing sectors reported declines in business, the survey found.
PMI aims to gauge the manufacturing industry’s health, with points higher than 50 indicating business expansion and values lower than the threshold suggesting contraction.
It was the second consecutive month it has retreated, with makers of electronics and biotech products no longer immune to the effects of the virus, the Taipei-based think tank said.
“Firms are generally conservative about business, although not as worried as during the height of the outbreak,” CIER president Chang Chuang-chang (張傳章) told an online media briefing.
Still, firms hesitate to speculate on a recovery, as uncertainty remains high and virus infections have not yet been brought under control in many parts of the world, Chang said.
The sub-index on new business orders fell to 35.9, the reading on industrial output slumped to 36.8 and the measure on new export orders tumbled to 34.4, the survey found.
Firms reduced headcount levels, accounting for a 3.2 point drop in the employment sub-index, it said.
However, inventory levels stayed high, driven by fears of potential supply chain disruptions, it said.
The inventory gauge and clients’ inventory readings rose 0.8 points and 4.5 points respectively to 51.3 and 55, a record high, CIER said.
Academia Sinica Institute of Economics director Kamhon Kan (簡錦漢) said high inventory levels without corresponding order growth is not a healthy signal and might lead to supply gluts later.
However, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) provided a positive interpretation, saying that high inventory reflects confidence on the part of companies about their business prospects.
Major local tech companies have said that their customers were pressing ahead with 5G deployment, unaffected by poor sales of smartphones and other consumer electronics amid the pandemic.
The sub-index on the six-month business outlook remained weak at 30.8, but picked up 5.1 points from a month earlier, the survey showed.
The non-manufacturing index (NMI) rose 2.7 points from a month earlier to 45.2.
The figure suggested that most service-focused firms continued to struggle, with the exception of hotels and restaurants.
The hospitality sector rebounded to 59.7, thanks to Mother’s Day sales and confidence about social activity after Taiwan reported no new local infections for more than a month, CIER said.
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