Taiwan’s manufacturing purchasing managers’ index (PMI) last month decreased 5.3 percentage points to 48.9, as most manufacturers have adopted a wait-and-see attitude, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
Among the major sub-indices, the six-month outlook plunged 23.1 percentage points to 36, marking the deepest decline since the outbreak of the COVID-19 pandemic in February 2020, indicating that local manufacturers are conservative about their business prospects, the CIER said.
The decrease is attributable to an easing in front-loading orders by manufacturers, as businesses turned conservative after US President Donald Trump proposed a 32 percent tariff on Taiwanese goods, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei.
Photo: Hsu Tzu-ling, Taipei Times
Most manufacturers are still in talks with overseas clients about their countermeasures and how to share the tariff costs, Lien said.
Although some believe the front-loading trend is slowing down, it is still ongoing, he said.
The reading on new orders dropped 9.3 percentage points to 47.5, as global trade was overshadowed by Trump’s unpredictable tariff and trade policies, China’s chip origin rule changes and a new US port surcharge on Chinese goods, the Taipei-based institute said.
The value of the new orders last month fell below the threshold of 50, the CIER said.
The subindex on industrial output plunged 8.3 percentage points to 47.5, ending two months of expansion, the CIER said.
By sector, half of the six major sectors tracked by the think tank showed contraction with readings below 50.
The electronics and optical industry, key to Taiwan’s economy, stayed above 50, but fell 4.7 percentage points to 54.1, as growth in new orders eased since most clients adopted a wait-and-see attitude instead of placing urgent orders as they did in March, CIER said.
Customers remained indecisive about how to share the tariff burden, it said.
Although several subindices showed declines last month, most manufacturers remained cautious rather than anxious about future developments, said CIER researcher Chen Shin-hui (陳馨蕙), who is in charge of the PMI survey.
This month’s index decline is mainly due to front-loading having been completed in March and a strong March performance setting a high comparison base, Chen said.
The institute is paying attention to the employment subindex, which dropped 4.4 percentage points to 46.6 percentage points, she said.
Academia Sinica fellow Kamhon Kan (簡錦漢) said order momentum could continue through mid-June, as the process is still ongoing.
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