Taiwan’s manufacturing purchasing managers’ index (PMI) last month edged up 1.2 points, but remained in contraction mode at 48, declining for an 11th straight month, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The economic barometer seeks to gauge the health of the manufacturing industry, with values of 50 and larger suggesting expansion and points below the threshold signifying contraction.
“Companies were generally cautious and adjusted capacity while waiting for a concrete recovery,” CIER president Yeh Chun-hsien (葉俊顯) said.
The Taipei-based think tank said the worst is over and a mild recovery is under way.
Firms shipped goods ahead of schedule to meet rerouting needs due to the Red Sea turmoil and are mixed about the outlook of delivery time and raw material prices, Yeh said.
Production schedule adjustments explained why the crucial subindex of new business orders dropped 0.3 points to 46.2, but the measure on industrial production rose 4 points to the healthy territory of 51.3, he said.
Furthermore, the reading on employment squeezed out a 0.5 point increase to 48.3, as firms raised staffing levels slightly to fill orders and accommodated longer shipping time.
Meanwhile, the sub-index on delivery time rose 1.6 points to 48.4, reflecting shipping disruptions linked to Red Sea rerouting, the CIER survey showed.
Uncertainties linger and many firms expressed hope that clients could shed more light on order visibility after the Lunar New Year holiday, Yeh said.
The subindex on inventory printed 45.7, virtually unchanged from 45.8 one month earlier, while customers’ inventory edged up 1.9 points to 43.6 as depletion continued.
Raw material prices gained 2.4 points to 56.2, meaning things grew more expensive, but firms hesitated to pass cost hikes to customers.
The measure on the six-month outlook grew 0.8 points to 46.2, the smallest decline in four months, as local manufacturers stayed largely conservative, accounting for the insignificant uptick in sentiment, it said.
Chip packagers and semiconductor equipment suppliers are relatively optimistic about their business prospects, Yeh said.
By comparison, services providers fared stronger, with the non-manufacturing index coming in at 53.5, expanding for 15 months in a row, albeit down 2.5 points from one month earlier, CIER said in a separate report.
Yeh said that demand for hospitality services cooled slightly, as more people traveled abroad.
Business at financial institutions improved, buoyed by the TAIEX’s rally, he said.
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