The downturn in Taiwan’s manufacturing industry eased last month while service-oriented firms saw a solid boost, fueling hope that the negative impact from the COVID-19 pandemic might have touched bottom, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The official purchasing managers’ index (PMI) came in at 47.2 last month, up 2.4 points from 44.8 one month earlier, indicating a milder contraction.
PMI scores of lower than 50 signify a decline, while those above the threshold indicate expansion. The latest data signified a third straight month of retreat.
“The pace of decline flattened in June, a positive development for manufacturers,” CIER president Chang Chuang-chang (張傳章) told a media briefing.
Suppliers of electronics, chemicals and biotechnological products bounced back to positive territory, while makers of food and textile products approached the neutral mark, Chang said.
However, companies selling electrical machinery, basic materials and transportation tools saw business stall, he said.
The pandemic has lent support to companies that supply test kits, masks, and electronic components used in remote learning and working, as well as 5G wireless technology, Chang said.
The sub-index on new business orders picked up significantly from 35.9 to 42.6, while the reading on industrial output rose from 36.8 to 45.3, the CIER’s monthly report showed.
The sub-index on employment hovered at similar levels of 45.2, up from 43.3, suggesting firms shed more headcount to cope with a soft patch.
The gauge on delivery time stayed high at 53.4, as border controls around the world slowed transportation, it said.
Raw material prices jumped by 10.9 points to 57.9 after oil exporting nations practiced restraint and cut supply, it said.
Companies are now more confident about the business outlook, as the sub-index on business prospects for the coming six months rose from 30.8 to 44.1, the survey found.
Chang said it is too early to talk about a recovery, with virus infections soaring in many parts of the world, casting a cloud over Taiwan’s exports.
The non-manufacturing index sent an encouraging signal at 54.4, rising from 45.2 and ending four months of declines, the report said.
The return to normalcy drove the uptick across the board and the forthcoming Triple Stimulus Vouchers would add heat to domestic trips, Chang said.
Companies in different service sectors expect the landscape to brighten ahead, with the six-month business gauge rising from 33.5 to 51.7, the report said.
However, the boom might prove short-lived if service providers rely only on stimulus measures and fail to improve service quality, Chang said.
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