Operating conditions for Taiwanese manufacturers fell last month amid lingering economic weakness in the US, Europe and China, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The official manufacturing purchasing managers’ index (PMI) shed 4.4 points to 49.2, dropping back into contraction territory, as companies turned from cautious to conservative regarding their business prospects, CIER president Lien Hsien-ming (連賢明) said.
“The subindices on new business orders, industrial production and business outlook all declined into the contraction zone, which could suggest a turning point,” Lien said.
Photo: Ritchie B. Tongo, EPA-EFE
PMI data aim to measure the health of the manufacturing industry. Values of 50 or higher indicating expansion, while values below the threshold suggest contraction.
The sentiment shift had to do with the market’s lack of enthusiasm over global sales of iPhone 16s and a stall in demand for electronics used in artificial intelligence (AI) applications, Lien said.
That explained why the critical subindex on new orders lost 8.2 points to 48.5, while the measure on industrial output tumbled 10.6 points to 46.8, the institute said in its monthly survey.
New export orders sank 8.2 points to 44.6, while unfinished orders dropped 5.9 points to 43.5, the survey showed.
PMI readings already pointed to a slowdown in the US, Europe and China, Lien said, adding that oil exporters last month trimmed their sales forecasts.
CIER researcher Chen Shin-hui (陳馨蕙) said that the absence of a growth catalyst accounted for the lackluster showings, despite the onset of the high season for technology products.
The reading on the six-month business outlook shrank 5.3 points to 47.5, putting an end to seven months of optimism, the survey showed.
CIER vice president Wang Jiann-chyuan (王健全) said that AI is in a bit of a bubble, which would be seen in last month’s shipments.
A Chinese ban on Nvidia Corp chips also would affect local firms in its supply chain, Lien said.
Taiwanese firms would need more time to judge whether rate cuts by the US Federal Reserve and stimulus measures in China would shore up the world’s two largest economies, he said.
Taiwan’s non-manufacturing sectors also experienced a slowdown, but remained at healthy levels, CIER said in a separate survey, as the non-manufacturing index lost 1.2 points to 53.3.
The PMI slowdown weighed on shipping rates and new credit controls by Taiwan’s central bank dampened buying interest at home, CIER said.
However, most service providers are positive about their business going forward, keeping the reading on the six-month outlook at 53.1, it said.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
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