The official manufacturing purchasing managers’ index (PMI) last month advanced by the weakest pace in 14 months to 57.8, as firms were less active in building inventory due to concerns over correction risks linked to port congestion and supply chain disruptions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The latest reading represented a retreat of 4.3 points from one month earlier, but stayed well above the expansion mark for the 15th straight month, the Taipei-based institute said.
“Firms generally saw their business growing, but no longer replenished inventory as actively as in the first half of the year to cope with uncertainty linked to lingering supply chain disruptions and port congestion,” CIER president Chang Chuang-chang (張傳章) told a news conference in Taipei.
Photo: Allen Wu, Taipei Times
Firms fine-tuned their inventory to rein in potential selling price corrections, Chang said, adding that shipments of memory chips, flat panels, smartphones and vehicles declined, as the lifting of lockdowns worldwide slackened demand for devices used in remote schooling and working.
The PMI reflects the health of the manufacturing sector, with readings above 50 indicating an expansion and values below suggesting a contraction.
The sub-index of inventory stood at 55.2, with client inventory at 51.8, the survey showed.
It is the first time since November 2014 that the client inventory gauge stayed above the expansion mark for three straight months, warranting caution, Chen said.
The measure on new business lost 8.8 points to 53.5, while industrial output shed 5.9 points to 57, indicating healthy operating conditions, although growth momentum slowed, the survey said.
CIER vice president Wang Jiann-chyuan (王健全) said that manufacturers in upstream operations fared better than companies down the supply chain, as the latter had difficulty passing cost increases on to their consumers.
The sub-index on raw material prices was listed at 77.9, suggesting cost burden increases, although easing from 80.1 one month earlier, the survey showed.
The reading on delivery times remained high at 69.1, from 69.6 one month earlier, as port congestion, in addition to material and component shortages, continued to weigh on shipments, the survey said.
As a result, firms were less upbeat about their business prospects for the upcoming six months, with the outlook measure weakening 5.8 points to 55.5, the survey said.
By contrast, service-oriented companies grew increasingly optimistic after local virus infections dwindled, a separate survey by CIER found.
The non-manufacturing index added 0.6 points to 57.3, as consumer activity is set to gain traction upon the issuance of the Quintuple Stimulus Vouchers later this week, Chang said.
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