The official manufacturing purchasing managers’ index (PMI) last month lost further steam, although it remained at a high level as all sectors reported business increases on the back of strong demand from abroad, the Chunghua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The economic bellwether shed 2 points to 64, above the booming mark of 60 for the eighth consecutive month, indicating that a COVID-19 outbreak in Taiwan had little effect on manufacturing activity, the backbone of exports.
PMI data are a gauge of the manufacturing industry, with values above 50 indicating expansion and values below the threshold suggesting contraction.
Photo: AP, Chiang Ying-ying
All subindices remained comfortably in the expansion zone, with the exception of customers’ inventory, which was 44.9, indicating that demand outstripped supply amid persistent shortages of raw materials and shipping chaos, the Taipei-based think tank said.
The pace of gains slowed for new orders, industrial production, employment, export orders, input prices, raw material prices and the six-month business outlook, CIER president Chang Chuang-chang (張傳章) told reporters.
Chang attributed the slowdown to a nationwide level 3 COVID-19 alert, which is taking a toll on consumer activity and business confidence.
The subindex on new orders softened 3 points to 64.7, with all sectors reporting a rise in business, especially suppliers of electronics and optical products, Chang said, adding that these firms are the most optimistic about business in the next six months as the high season for technology products approaches.
Taiwan is home to the world’s largest contract makers of chips, camera lenses, flat panels and other components used in smartphones, tablets, laptops and peripheral devices.
The reading on industrial output dropped 2 points to 63.8, while the gauge on export orders lowered 4.1 points to 59.7, CIER said.
The subindex on delivery times was 71.6, albeit down from a record 74.8 in April.
Container space shortages and congestion at ports remained acute due to virus restrictions in China, and rapid economic recovery in the US and Europe, Chang said.
Uncertainty over supply chains and the reliability of shipping schedules prompted firms to boost inventory, which helped keep the readings for raw material and component costs high at 84 and 61.1 respectively, down from 90.4 and 66.2 in May, CIER said.
Firms are generally positive about the six-month outlook, with that index at 64.3, down from 67, it said.
Non-manufacturing sectors bore the brunt of the virus restrictions, with the non-manufacturing purchasing managers’ index slipping 3.2 points to 46, CIER said.
The pinch is sharp for cram schools, restaurants, retailers and financial and insurance companies, it said.
However, logistics and shipping service providers, wholesale companies, and telecoms benefited from a boom in a low-contact economy, it said.
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