The official manufacturing purchasing managers’ index (PMI) last month printed 45.5, mired in the contraction zone for the sixth consecutive month, as all sectors saw business retreat except makers of food and textile products, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
“The dark before the dawn appears longer than expected,” CIER president Yeh Chun-hsien (葉俊顯) told reporters. “Firms simply failed to see a turnaround in demand that normally emerge in the third quarter.”
Taiwan houses the world’s major suppliers of electronics used in smartphones, personal computers, wearables and TVs for which global brands usually build up inventory this quarter ahead of the holiday season in the West.
Photo: CNA
Last month’s reading is lower than July’s 46.1, as business declined at a faster speed for most sectors, Yeh said.
PMI data aims to determine the health of the manufacturing industry, with values above 50 indicating expansion and points below the threshold suggesting contraction.
Companies said that they had cut prices in the hope of spurring demand, but to no avail, he said.
Firms increasingly accept the view that a meaningful recovery may have to wait until the first half of next year, he said.
The critical sub-index of new business order shed 1.5 points from 48.1 to 46.6, while the reading on raw material prices rallied 9.4 points to 53.2, after oil export countries tightened supply to defend prices, Yeh said.
Downstream firms opted to respond by slowing and postponing business, he said.
“It goes without saying that poor end-market demand and raw material price hikes made business operation more challenging,” he said.
China’s recovery in the post-pandemic era has proved evasive so far, and the success of newly introduced stimulus measures is too early to be determined, Yeh said, adding that ongoing financial woes facing Chinese developers and asset managers raise uncertainty.
Things turned out better in the US, but most were rush and short orders, Yeh said. “The improvement is lacking in passion and regularity,” he said
Against the backdrop, the measure of the six-month outlook lost 1.1 points to 42.1, the survey found.
The conservative sentiment somewhat affected non-manufacturing sectors with the NMI easing 1.4 points from 55.7 to 54.3, Yeh said.
Most services providers reported an increase in business during last month, though hotels and restaurants bucked the trend after a growing number of Taiwanese travelled abroad, Yeh said.
Furthermore, the business outlook measure weakened 5.8 points from 50.8 to 45, suggesting a overall negative view, he said.
The upcoming Singles’ Day shopping festival might shed more light on how services sectors fare, he said.
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