The manufacturing purchasing managers’ index (PMI) last month shed another 1.5 points to 43.9, the worst since the launch of the survey in July 2012, due to inventory correction and sluggish end demand, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
It is the fifth consecutive month the economic barometer sunk into contraction mode, which could persist until the impact of global monetary tightening fades, likely at the end of next year, economists said.
“Raw material and mature technology suppliers are looking forward to a turnaround in the second quarter of next year, but makers of consumer electronics and machinery tools are bracing for inventory adjustments the year round,” CIER president Chang Chuang-chang (張傳章) said.
Photo: Hsu Tzu-ling, Taipei Times
PMI data aim to gauge the health of the manufacturing industry with scores larger than 50 indicating business expansion and values lower than the threshold suggesting decline.
Major upstream companies coped with the low season by cutting capacity and capital expenditure, but downstream firms resorted to selling at a loss to digest inventory and maintain cash flows given their lack of bargaining power, the Taipei-based think tank said.
The critical index on new business orders declined a fractional 0.9 points to 41.9, while the reading on industrial production shed 1.8 points to 42.8, the institute’s monthly survey found.
The employment index slid 0.6 points to 48.3, as companies shrank payrolls, it said.
The inventory gauge fell 2.9 points to 43.6 and customers’ inventory slid 0.2 points to 49.9, reflecting the conservative sentiment and easing of an inventory glut, it said.
Firms held negative views about business going forward as evidenced by the bleak six-month outlook at 25.3, albeit a rise of 0.5 points from one month earlier, Chang said.
Kamhon Kan (簡錦漢), an economic researcher at Academia Sinica, said it is too early to speculate on a turnabout, as global economies need more time to assimilate interest rate hikes by the US Federal Reserve.
Even if the Fed slows or halts interest rate hikes, the impact of earlier monetary tightening would be evident next year and beyond, Kan said.
That means a much-expected recovery would come later, the academic said.
Service providers fared better, with the non-manufacturing index recovering 2.2 points to 52.2, CIER found.
Domestic demand is gaining pace, thanks to looser COVID-19 controls, Chang said.
Kan disagreed, saying that service sectors are recovering, but are far from a boom.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Nanya Technology Corp (南亞科技) yesterday said the DRAM supply crunch could extend through 2028, as the artificial intelligence (AI) boom has led the world’s major memory makers to dramatically reduce production of standard DRAM and allocate a significant portion of their capacity for high-bandwidth memory (HBM) chips. The most severe supply constraints would stretch to the first half of next year due to “very limited” increases in new DRAM capacity worldwide, Nanya Technology president Lee Pei-ing (李培瑛) told a news briefing. The company plans to increase monthly 12-inch wafer capacity to 20,000 in the first half of 2028 after a
Taiwan has enough crude oil reserves for more than 100 days and sufficient natural gas reserves for more than 11 days, both above the regulatory safety requirement, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday, adding that the government would prioritize domestic price stability as conflicts in the Middle East continue. Overall, energy supply for this month is secure, and the government is continuing efforts to ensure sufficient supply for next month, Kung told reporters after meeting with representatives from business groups at the ministry in Taipei. The ministry has been holding daily cross-ministry meetings at the Executive Yuan to ensure
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
RSS