The official manufacturing purchasing managers’ index (PMI) last month shed 1.1 point to 47.1 as firms turned cautious in dealing with renewed global uncertainty in the wake of the Israel-Hamas war and ensuing hikes in international oil prices, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
September’s pickup in new business orders proved short-lived and firms are now looking at a delay in recovery from the first quarter to the second quarter of next year, CIER president Yeh Chun-hsien (葉俊顯) told reporters.
“Mounting geopolitical tensions and financial market volatility are taking a toll on business confidence, as evidenced by the retreat in purchasing activity,” Yeh said.
Photo: Hsu Tzu-ling, Taipei Times
PMI data seek to capture the manufacturing industry’s pulse, with values of 50 and higher indicating expansion and values lower than the threshold suggesting contraction. It has indicated contraction for eight straight months, in line with wobbly operating conditions.
Sectors that saw business improvement in September lost growth momentum last month, Yeh said, citing biotechnology, chemical and medical product makers as a examples.
Only suppliers of notebook computers and electronics used in artificial intelligence applications thrived, Yeh said.
The critical subindex of new business orders dropped 3.4 points to 48.3, as firms exercised caution in coping with the shadow of recurring inflation after oil prices approached US$100 a barrel, the monthly survey showed.
The measure on industrial output softened 3.5 points to 49.4, while the reading on employment gained 1.5 points to 48.6, below the neutral mark due to payroll downsizing, the agency said.
The gauge on inventory fell 2.6 points to 42.8 and customers’ inventory edged up 0.6 points to 44.7, both reflecting a conservative approach, it said.
The subindex on raw material prices weakened 5.3 points, but remained at relatively high levels of 53.4, it said, adding that firms were afraid of passing extra cost burdens to customers for fear of business losses.
Unfavorable macroeconomic scenes caused a 4.9-point decline in the six-month business outlook from one month earlier, it said, adding that poor sentiment affects all sectors and has to do with Washington’s recent tightening of export bans to China.
Taiwan’s non-manufacturing index last month was 53.2, virtually unchanged from 53.5 in September, expanding for 12 consecutive months, the Taipei-based institute said in a separate report.
Service providers are looking to see business increase over the Singles’ Day shopping festival later this month and corporate gatherings toward the end of the year, Yeh said.
However, non-manufacturing firms are increasingly conservative about business outlook in next six months, with the index dropping from 48 to 45.1, as benefits of pent-up consumption fade away, he said.
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