The S&P Global Taiwan Manufacturing Purchasing Managers’ Index (PMI) was still below the 50 point threshold last month, indicating that operating conditions remained tough for local manufacturers due to weak end-market demand in the US and Europe.
Last month’s reading was 44.8, up slightly from 44.3 in May, S&P Global said in a report yesterday.
The index has been in negative territory for more than a year, S&P Global said.
Photo: Ritchie B. Tongo, EPA-EFE
The health of Taiwanese manufacturers had deteriorated further at the end of the second quarter in light of a sharp retreat in production, along with a solid decline in new business, the report said.
“Taiwan’s manufacturing sector had another tough month in June, according to [the] latest PMI data, with companies signaling further rapid declines in output and new orders,” S&P Global Market Intelligence economics associate director Annabel Fiddes said in the report.
Firms responded to soft demand by cutting back on purchasing activity, inventories and staff numbers, the report said.
Production at local manufacturing firms dropped for a 15th consecutive month last month, while export orders declined at the quickest rate in five months as demand remained weak worldwide, it said.
Subdued customer demand prompted local firms to reduce their selling prices at a concrete rate, a move that was supported by a further drop in average input costs, the report said.
Local media yesterday reported that chipmakers United Microelectronics Corp (UMC, 聯電) and Powerchip Semiconductor Manufacturing Corp (力積電) had shown more willingness to consider price concessions to stimulate sales after their Chinese peers had shown greater price flexibility.
The reading on Taiwanese manufacturers’ 12-month business outlook slipped into negative territory, and firms’ conservative assessments led them to reduce staffing levels at the quickest pace in more than 14 years, the S&P report said.
“It seems unlikely the sector will move back into recovery until we see improvements in global economic conditions and stronger demand across key markets such as the US and Europe,” Fiddes said.
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