Taiwan’s official manufacturing purchasing managers’ index (PMI) last month gained 0.8 points to 50.0, returning marginally to the expansion side, as firms remain cautious about political uncertainty linked to the US presidential election next week, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
“The latest PMI data merited a neutral reading,” CIER president Lien Hsien-ming (連賢明) said.
“On one hand, it emerged from contraction, but firms remained uneasy about the landscape this quarter and beyond,” Lien said.
Photo: CNA
PMI values seek to capture the health of the manufacturing industry, with values of 50 and higher indicating expansion and values below that threshold suggesting contraction.
The latest uptick had to do with China’s introduction of monetary easing to support its economy, although fiscal stimulus measures are widely believed to be more effective in advancing that aim, Lien said.
The critical subindex on new business rose 3.4 points to 51.9, while the measure on industrial production picked up 3.7 points to 50.5, the Taipei-based think tank said, adding that the employment subindex increased by 0.7 to 50.5.
Although the three indices displayed positive cyclical movements, they hovered close to the neutral mark, suggesting a need for clear direction, the academic said.
“Many wonder if the benefit of China’s monetary easing could be sustained in the absence of fiscal stimulus,” Lien said.
In addition, firms would rather keep a cautious attitude until uncertainty over the US presidential election on Tuesday next week is settled, Lien said.
The Republican and Democratic US presidential nominees have pledged to tighten technology bans against China. The move could have a spillover effect on Taiwanese firms, as the world’s two largest economies account for more than 50 percent of Taiwan’s exports.
That explained why the reading on the six-month business outlook printed 48.3, rising 0.8 points, but staying in negative territory, which reflects a generally conservative sentiment, the institute said.
The sentiment is evident among local suppliers of electronic and optical devices, which printed 47 due to a lack of stable order visibility, CIER researcher Chen Shin-hui (陳馨蕙).
Reports of disappointing sales of new-generation smartphones and notebook computers cast further doubt on business prospects, despite the advent of the holiday season in the West, she said.
Service-oriented firms fared better given that the non-manufacturing index logged a mild gain of 0.5 points to 53.8, CIER said, citing a separate survey.
All sectors reported a business pickup with the exception of wholesale operators, it said.
Looking six months forward, firms involved in wholesale, retail, construction and real-estate brokerage expressed misgivings after the central bank stiffened lending terms to cool the housing market.
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