Taiwan’s official manufacturing purchasing managers’ index (PMI) last month increased 1.5 points to reach 49.4, as new business orders and industrial output returned to growth mode and most firms are upbeat about their business ahead, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The latest PMI data represented the 14th consecutive month of contraction, but the pace of decline is the mildest since March of last year.
CIER president Yeh Chun-hsien (葉俊顯) compared Taiwan’s manufacturing industry to a state of “setting sail for recovery,” saying that it would grow more evident in the second half of this year.
Photo: Hsu Tzu-ling, Taipei Times
“Urgent and short orders still account for a sizable number of new business orders, explaining why firms remain cautious about purchasing activity,” Yeh told a news conference in Taipei.
PMI values of 50 and larger suggest expansion and points below the threshold indicate contraction.
The sub-indices on new business orders and industrial production picked up 3.2 and 2.8 points to 50.1, as all sectors reported business improvement except for makers of transportation tools and basic raw materials, the survey found.
The rebound in new orders came mainly from the US and China, the two largest destinations for Taiwan’s outbound shipments, Yeh said.
The measure on delivery time expanded for the first time since July 2022, it said.
Domestic shipping company Wan Hai Lines Ltd (萬海航運) yesterday said that its freight rates would rise 15 percent this month for cargos bound for the US to reflect rising demand and tight supply.
The reading on raw material prices spiked 5.8 points to 64.1, but the measure on input prices declined 2.1 points to 51.1, as firms refrained from passing production cost hikes to customers, it said.
The restraint had to do with sharp price competition from rivals for mature products, Yeh said.
Firms are generally optimistic about their business moving forward, though the measure on the six-month outlook dropped 1.2 points to 55.2, but this is still a healthy level, it said.
Makers of electronics, biotechnology, food and textile products demonstrate more confidence than firms in other sectors, it said.
That suggested an extended period of uneven recovery, Yeh said.
The non-manufacturing index (NMI) picked up 0.6 points to 54.1, expanding for 18 straight months, CIER said in a separate survey.
The April 3 earthquake which measured magnitude 7.2 on the Richter scale, had a negative impact on hospitality service providers, but demand for outbound travel remained high, which shored up business at travel agencies, Yeh said.
The six-month reading shed 4.2 points to 54.9, as firms voiced concern that the electricity rate hike would eat at their profits, he said.
Separately, S&P Global Market Intelligence's manufacturing PMI data showed Taiwan’s factory activity expanded for the first time in two years.
The semiconductor powerhouse posted a manufacturing PMI of 50.2 last month, up from 49.3 in March and posting its best result since April 2022, S&P Global reported yesterday. A reading above 50 indicates expansion, while anything below shows contraction.
Taiwan ramped up output amid higher new orders, with companies reporting improved demand from the domestic market, S&P said. Overseas take-up was still subdued, so firms remained “understandably somewhat cautious” in their buying activity, opting instead to use their inventories, it said.
“That said, companies are confident that growth will pick up and were sufficiently optimistic to add to their staffing levels for the third time in the past four months,” S&P Global economics director Paul Smith said in a statement.
Additional reporting by Bloomberg
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