The manufacturing purchasing managers’ index (PMI) last month shed 0.6 points to 47.2, remaining in the contraction zone for two straight months, as inventory digestion stalled amid inflation and economic uncertainty, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The rate of contraction is the deepest in two years, and the coming release of the latest iPhone model is unlikely to make it rise, the Taipei-based think tank said.
“Major economies have released disappointing data, which is bound to affect Taiwan’s exports, with the blow becoming evident in the fourth quarter,” the high season for technology products, CIER president Chang Chuang-chang (張傳章) said.
Photo: Ann Wang, Reuters
The PMI gauges the health of the manufacturing industry, with scores above 50 indicating expansion and values below the threshold suggesting contraction.
The US is heading toward recession, and China is not faring well due to strict COVID-19 controls, the economist said, adding that the two countries account for more than 50 percent of Taiwanese exports.
Only food manufacturers last month saw business expand due to seasonal demand during the Ghost Festival, the institute said.
Business decline is not industry-wide, but it is mainly limited to downstream supplers, namely finished goods vendors, researcher Chen Shin-hui (陳馨蕙) said.
The inventory glut is so unfavorable that Apple Inc’s new product launches next week are not likely to reverse the course, Chen said.
The US technology titan is slated to unveil the next-generation iPhone series and Apple Watch on Thursday next week, benefiting local firms in their supply chain.
The forthcoming product launch helped the critical sub-index on new business orders gain five points, although it remained in contraction territory at 41.6, Chen said.
Meanwhile, the measure of industrial production increased by 0.6 points to 44.4.
Companies overall turned conservative and cut headcounts, pushing the employment reading down by 2.7 points to 48.8, the institute’s monthly survey found.
Delivery time lost a further 3.7 points to 45.6, while raw material prices weakened 5.4 points to 43.9, indicating smoother shipping and eased inflationary pressures.
However, the inventory reading remained high at 55.7, and customers’ inventory held firm at 59.2, stemming from previous overbooking and current tepid demand.
Consequently, the six-month business outlook dropped by 1.8 points to 28.3, with all sectors sharing a pessimistic sentiment, it said.
Sectors reliant on domestic demand fared better, with the non-manufacturing purchasing managers’ index standing at 53.8, although it lost 2.9 points, CIER said.
Chang said he doubted that the expansion mode for service providers would be sustainable if exporters continue to suffer.
Wholesale operators, as well as logistics and warehousing service providers, reported a business decline because of their heavy dependence on exporters, the economist said, adding that firms were generally not optimistic about business for the near future.
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