Taiwan’s manufacturing activity continued to contract last month, with the sector’s purchasing managers’ index (PMI) registering 48.3, marking its fourth consecutive month below the neutral 50-point threshold, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The data underscored how US tariff uncertainty and a sluggish global backdrop are weighing on traditional industries, even as artificial intelligence (AI) demand continues to provide pockets of strength.
“For the first time in about two years, employment contracted across all major sectors,” CIER vice president Chen Shin-horng (陳信宏) told a news conference in Taipei.
Photo: CNA
“The divergence is becoming sharper between firms riding the AI supply chain and those facing mounting pressure outside it,” Chen said.
The Ministry of Labor yesterday said that the number of employees placed on furlough or shorter hours climbed to 8,505 at the end of last month, up 2,471 from a month earlier.
The manufacturing sector accounted for 95 percent of all reported cases, with the metal and electromechanical sector bearing the brunt. Within that category, machinery and equipment makers were the most exposed, with 145 companies and 3,559 workers affected.
The latest PMI data showed order momentum remains weak. Subindices tracking new orders and the six-month outlook contracted for a sixth straight month, although the pace of decline eased slightly, Chen said.
Traditional industries such as transportation equipment, textiles and food products posted some of the steepest contractions, with PMIs of 41.
In contrast, power and machinery equipment manufacturers bucked the broader trend and stayed in expansion, lifted by stronger US demand for power systems used in building AI infrastructure.
Cable and wiring suppliers also reported a surge in orders, while machinery producers linked to energy and AI applications signaled an improved outlook.
Beyond manufacturing, Taiwan’s services sector showed greater resilience, the CIER said.
The non-manufacturing index (NMI) rose 1.4 points to 52.1, supported by robust sales of next-generation smartphones and other tech products, as well as rallies on the local bourse.
Telecoms, retailers, shippers and financial companies all reported stronger activity, the CIER said.
Hospitality and restaurants faced headwinds from heavy rainfall and flooding in eastern Taiwan, which disrupted tourism and local spending, Chen said.
Separately, the Taiwan Institute of Economic Research (TIER) released its monthly report on the nation’s manufacturing sector, which recorded the sector’s record contraction in August, as traditional industries continued to face weak demand and intense overseas competition, prompting many firms to scale back output or adjust production schedules.
The TIER said Taiwan’s outlook remains closely tied to developments in the US and China, as it urged manufacturers to stay alert to potential challenges and global uncertainties.
Tariff uncertainty is easing in the US, but duties on semiconductors remain unresolved, while the US Federal Reserve has signaled a cooling labor market and lingering inflationary pressure from tariffs, the TIER said.
In China, “anti-involution” measures and market support policies aimed at reducing competition could help ease deflation risks, although their effectiveness in boosting consumer confidence and growth remains unclear, it added.
Additional reporting by CNA
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