PMI rises for fourth consecutive month

Tue, Sep 03, 2024 page12

PMI rises for fourth consecutive month

WORKLOAD: While companies appeared to be somewhat capacity constrained, they focused on raising productivity rather than hiring, resulting in backlogs, a researcher said
- By Crystal Hsu / Staff reporter
Taiwan’s official manufacturing purchasing managers’ index (PMI) last month rose 1.4 points to 53.6, expanding for the fourth consecutive month, as most firms reported that business was improving, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
A separate survey by S&P Global also showed that Taiwan’s factory activity last month remained healthy at 51.5, although moderating from July’s 52.9.
“Taiwan’s semiconductor firms continued to benefit from strong demand for electronics used in artificial intelligence” (AI), CIER president Lien Hsien-ming (連賢明) said.

People look at robotic arms through a window at the Intelligent Asia trade show at the Taipei Nangang Exhibition Center on Aug. 21.

Photo: CNA

However, some firms reported shipment slowdowns or delays due to chip design flaws at Nvidia Corp, Lien said.
That probably explained why chip testers and packagers, as well as other firms in the AI supply chain, reported business tapering somewhat, he said.

PMI data seek to shed light on the health of the manufacturing industry, with values of 50 or higher indicating expansion and below the threshold suggesting contraction.
The critical subindex on new business rallied 2.8 points to 56.7, while the measure on industrial output added 3.5 points to 57.4, the Taipei-based think tank said in its latest monthly report.
The robust state appeared industry-wide, except at firms involved in the supply of transportation tools as well as electricity and machinery equipment, given that they were hit by order retreats, the report said.
The reading on inventory levels rose 0.9 points to 49.9, while customers’ inventory lost 0.3 points to 44.3, it showed.
The gauge on the six-month business outlook shed 2.2 points to 52.8, the slowest uptick since February, as some firms turned cautious about uncertainty linked to the US presidential election, mixed economic data in the US and a lack of economic vigor in China, Lien said.
Lien said there was no need to worry about an unexpected economic downturn, as the operating environment remained positive, although momentum weakened a bit.
Specifically, selling prices for memory, base metal and chemical products showed signs of corrections, CIER researcher Chen Shin-hui (陳馨蕙) said.
S&P Global Market Intelligence economic researcher Paul Smith said Taiwanese firms appeared to be somewhat capacity constrained, but preferred to focus on raising productivity rather than expanding their workforces.
The result was another rise in backlogs of work, Smith said.
Firms generally signaled concern over the global economic outlook, a factor that was instrumental in pushing down overall sentiment to its lowest level of the year, he said.
Likewise, the vitality for Taiwan’s nonmanufacturing companies fell 2.8 points to 54.5, but was still comfortably above the expansion mark, the CIER said.
The figures followed active stock trading and housing deals, although a sizeable number of people spent the summer abroad, limiting sales for retailers and hospitality firms, it said.
Retailers and information and communication operators are looking at business deterioration ahead, but other service providers expect sales to pick up, the institute said.
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