The official manufacturing purchasing managers’ index (PMI) last month dropped to 43.7, as almost all sectors continued to adjust inventory to cope with a reduction in business, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
It is the sixth consecutive month that the economic barometer has contracted, as global inflation and monetary tightening have taken a toll on demand.
“The PMI hit a new low since the launch of the survey, as firms said they remain weighed down by inventory corrections and there are few new orders,” CIER president Yeh Chun-hsien (葉俊顯) told a news conference in Taipei.
Photo: Hsu Tzu-ling, Taipei Times
PMI readings aim to gauge the health of the manufacturing industry, the pillar of Taiwan’s exports, with values above 50 indicating expansion and those lower than the threshold indicating a contraction.
The latest PMI data affirmed that there was no peak season in the final quarter of last year — the traditional high season for consumer electronic gadgets, Yeh said, adding that there is unlikely to be a rebound ahead of the Lunar New Year either.
It is too early to tell how the market will assimilate a spike in COVID-19 cases in China following the abrupt removal of its “zero COVID” policy, he said.
The critical subindex on new orders shed 2.1 points to 39.8, reflecting sluggish demand from clients at home and abroad, CIER’s monthly survey showed.
Food and textile product suppliers proved to be the only exception, with readings of more than 60 in the purchasing activity and new order categories, thanks to a fast recovery in Taiwan’s private consumption, the survey said.
The subindex on industrial production dipped by 0.1 points to 42.7, while the employment measure gained 0.1 points to 48.4, it said.
Encouragingly, the inventory and clients’ inventory gauges were 43.5 and 48.6 respectively, suggesting a concrete decline in inventory pressures, CIER researcher Chen Shin-hui (陳馨蕙) said.
Technology firms earlier reported an excess of inventory caused by overbooking and supply chain clogs in 2020 and 2021.
“The worst [of the inventory corrections] is likely over, based on the inventory figures,” Chen said.
However, the six-month outlook was disappointingly low at 29.3, although it increased by 4 points from a month earlier, as all sectors expect poor business in the first two quarters of this year, the survey said.
The non-manufacturing index performed better, gaining 1.1 points to 53.3 — its second consecutive month of expansion, CIER said.
Yeh said that service providers are continuing to bask in “revenge consumption” as Taiwanese are growing less afraid of COVID-19.
Looking forward, only hotels and restaurants expect the upturn in business to continue in the next six months, the survey found.
Meanwhile, the S&P Global’s Taiwan manufacturing PMI last month rose to 44.6 from 41.6 a month earlier, indicating some easing of the downturn. Even so, the index has remained in contraction for seven consecutive months.
“There were widespread reports of weaker demand both at home and overseas, with firms commenting on reduced demand across Europe, mainland China and the US in particular,” S&P Global Market Intelligence economics associate director Annabel Fiddes wrote in comments accompanying the data.
“Business confidence stayed firmly in negative territory, as manufacturers anticipate further cuts to output in the months ahead,” she said. “This seems increasingly likely if signs of spare capacity persist and global demand conditions fail to recover.”
Additional reporting by Bloomberg
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
On Ireland’s blustery western seaboard, researchers are gleefully flying giant kites — not for fun, but in the hope of generating renewable electricity and sparking a “revolution” in wind energy. “We use a kite to capture the wind and a generator at the bottom of it that captures the power,” said Padraic Doherty of Kitepower, the Dutch firm behind the venture. At its test site in operation since September 2023 near the small town of Bangor Erris, the team transports the vast 60-square-meter kite from a hangar across the lunar-like bogland to a generator. The kite is then attached by a
Foxconn Technology Co (鴻準精密), a metal casing supplier owned by Hon Hai Precision Industry Co (鴻海精密), yesterday announced plans to invest US$1 billion in the US over the next decade as part of its business transformation strategy. The Apple Inc supplier said in a statement that its board approved the investment on Thursday, as part of a transformation strategy focused on precision mold development, smart manufacturing, robotics and advanced automation. The strategy would have a strong emphasis on artificial intelligence (AI), the company added. The company said it aims to build a flexible, intelligent production ecosystem to boost competitiveness and sustainability. Foxconn
Leading Taiwanese bicycle brands Giant Manufacturing Co (巨大機械) and Merida Industry Co (美利達工業) on Sunday said that they have adopted measures to mitigate the impact of the tariff policies of US President Donald Trump’s administration. The US announced at the beginning of this month that it would impose a 20 percent tariff on imported goods made in Taiwan, effective on Thursday last week. The tariff would be added to other pre-existing most-favored-nation duties and industry-specific trade remedy levy, which would bring the overall tariff on Taiwan-made bicycles to between 25.5 percent and 31 percent. However, Giant did not seem too perturbed by the
RSS