The nation’s manufacturing purchasing managers’ index (PMI) last month slowed to 57.6 from 62 in May, as companies continued to see business improve, but at the slowest pace in seven months due to the COVID-19 pandemic, IHS Markit said yesterday.
The growth momentum could cool further until operating conditions normalize, the international research body said in a report.
“The latest PMI data indicated that growth momentum softened across Taiwan’s manufacturing industry at the end of last quarter, with output and new orders both rising at the slowest rates since August last year,” IHS Markit economics associate director Annabel Fiddes said in a press release.
Photo: Wu Chun-feng, Taipei Times
The PMI report aims to capture the health of manufacturing sectors, with values larger than 50 suggesting expansion and points below the threshold indicating contraction.
Weighing on the headline index was a notably slower expansion in production, the report said, adding that the latest increase, though solid, was the softest since August last year.
Respondents indicated that production schedules were affected by raw material shortages, as well as the recent rise in domestic COVID-19 cases.
At the same time, growth in new work also slowed to a 10-month low, with companies saying the outbreak weakened domestic demand.
New export sales also rose at a weaker pace, albeit still robust overall, the report said.
Supply chain delays remained severe, with lead times for inputs deteriorating at one of the fastest rates on record, it said.
Firmer demand for inputs, low inventory levels at vendors and COVID-19 restrictions impeded supplier performance, the report said.
Difficulties in obtaining inputs drove companies to stock inventories and help push up input costs, the report said.
Input cost hikes remained rapid due to more expensive raw materials and transportation services, it said.
Companies by and large opted to pass cost burdens onto clients in the form of increased output charges, although inflation subsided compared with May.
Companies expanded their payroll at a pace that was little changed from one month earlier, the report said. The increase had to do with efforts to meet growing customer demand and capacity pressures persisted, as evidenced by a marked increase in work backlogs, it said.
Taiwanese manufacturers are generally upbeat about business one year ahead, but the degree of confidence slid to an eight-month low, IHS Markit said.
Many firms expect global conditions to gradually emerge from the COVID-19 pandemic, but voiced concern that local infections might hamper growth, it said.
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