Taipei: Taiwan's manufacturing sector remained in contraction for the fourth consecutive month in September, as the seasonally adjusted purchasing managers index (PMI) edged up 0.4 points to 48.3, reported the Chung-Hua Institution for Economic Research (CIER) on Wednesday. The survey indicated that new orders and the six-month business outlook were still in contraction for the sixth month, though each showed slight improvement.
According to Focus Taiwan, all six major manufacturing industries reported employment contraction for the first time since October 2023. The electric power and machinery equipment sector was the only industry to experience growth, driven by U.S. demand for power equipment, rather than a recovery in the machine tools sector, as stated by CIER Vice President Chen Shin-horng during a news briefing.
Academia Sinica economist Kamhon Kan highlighted the continued performance of AI-related industries, including semiconductors, servers, and heavy electrical equipment, despite struggles faced by the autos, petrochemicals, and machine tools sectors due to tariff pressures. Analysts noted that weak global demand combined with U.S. protectionist policies have resulted in cautious business practices, with the complete impact of tariffs expected to manifest in early 2026.
Pai Tsung-cheng, head of the Supply Management Institute, Taiwan, observed that businesses are increasingly relying on short-term "nowcasting" rather than long-term forecasts amid rising uncertainty. Meanwhile, in the service sector, the nonmanufacturing index (NMI) rose by 1.4 points to 52.1 in September, marking a seventh consecutive month of expansion due to stock market gains, new tech product launches, and seasonal demand. However, the sector's six-month outlook improved but remained in contraction at 42.1.
It is important to note that PMI and NMI readings above 50 indicate expansion, while those below 50 signify contraction.