Manufacturing activity last month remained in expansion mode for the 24th consecutive month, but uncertainty over the global economy is likely to affect the sector down the road, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
Data compiled by CIER showed that the seasonally adjusted purchasing managers’ index (PMI) rose slightly from a month earlier by 0.1 points to 53.6, largely due to an increase in the subindex for new orders.
The non-manufacturing index (NMI), which covers service sector activity, also moved higher by 4.6 points from a month earlier to 49.7, but the index stayed in contraction mode for the second consecutive month, the think tank said.
For the PMI and NMI, readings above 50 indicate expansion, while those below 50 represent contraction.
Speaking at an online news conference, CIER president Chang Chuang-chang (張傳章) said that after China eased COVID-19 lockdowns last month, Taiwanese production showed signs of recovering.
Domestic production also recovered as COVID-19 infections eased after peaking in May, he said.
As a result, the subindex on production returned to expansion mode last month, rising 3.7 percent from a month earlier to 51.6.
Among the four other factors in last month’s PMI, the subindex for new orders rose 1.8 points from a month earlier to 47.4, but remained in contraction mode, while the subindices for employment and inventories rose 0.9 points each to 55.1 and 59.1 respectively.
Bucking the upturn, the subindex for supplier deliveries fell 6.9 points from a month earlier to 54.8 last month.
Chang said that orders placed last month were largely deferred orders, so the increase in the subindex does not indicate the manufacturing sector received large additional orders.
As for the business outlook over the next six months, the subindex fell 6.9 points from a month earlier to 37.1, the lowest since June 2020, when the figure stood at 33.7.
It was the second consecutive month the subindex has contracted, CIER said.
In terms of the six major industries in the PMI, only the subindices for food/textile and transportation equipment industries moved higher from a month earlier, CIER said.
The subindices for chemicals and biotechnology, electronics and optoelectronics, basic raw materials and electrical equipment industries moved lower from a month earlier, it said.
Citing a survey, Chang said with the exception of some food suppliers and select biotech firms, many in these major industries expressed concern over weakening demand after seeing their orders fall last month.
The global economy has shown signs of weakening, which has affected demand at a time when major central banks, in particular the US Federal Reserve, have started a rate hike cycle to fight inflation, Chang added.
As a result, despite a small recovery in last month’s PMI, the local manufacturing sector still faces uncertainty in the wake of such unfavorable circumstances, he said.
As for the NMI’s recovery, as the number of COVID-19 cases moderate, consumers appear more willing to spend and travel, he said.
Among the four NMI subindices, business activity, new orders and employment moved higher by 10.2, 8.8 and 1.5 to 48.0, 46.3 and 50.8 respectively, but the subindex for supplier deliveries moved lower by 1.9 to 53.8.
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