Taiwan’s PMI falls to new low

Taipei, Taiwan's manufacturing activity continued to weaken with the Purchasing Managers' Index (PMI) for December falling to the lowest level since the index was introduced in July 2012, the Chung-Hua Institution for Economic Research (CIER) said Wednesday.

CIER, one of the leading think tanks in Taiwan, said the weakening activity reflected the impact of unfavorable factors on the global market, in particular trade friction between the United States and China.

The PMI for December fell 3.2 from November to 44.8 with the manufacturing sector remaining in contraction mode, data released by CIER showed.

The non-manufacturing index (NMI) for the local service sector in December also moved lower by 0.7 from a month earlier to 51.6, though it remained in expansion mode, the data indicated.

For the PMI and NMI, readings above 50 indicate expansion or growth, while those below 50 represent contraction.

Wang Jiann-chyuan acting president of CIER, told the press that the Washington-Beijing trade disputes have imposed uncertainty on the global economy, including the export-oriented Taiwan economy, which has felt the impact on the global supply chain.

In addition, Wang said, falling international crude oil prices have pushed down raw material prices, which is bad for Taiwan's export value, while slower-than expected sales of the latest iPhones have also hit Taiwanese suppliers' shipments.

In December, all of the five major factors in the PMI showed signs of weakness, CIER said.

The sub-indexes on new orders, production, employment, suppliers' deliveries and inventories fell 5.0, 6.1, 1.6, 0.9 and 2.2, respectively, from a month earlier to 42.6, 43.1, 47.7, 45.0 and 45.8 in December. All five were in contraction mode.

In addition, the sub-index on the business climate over the next six months fell 0.5 from a month earlier to 33.2 in December, marking the fourth consecutive month of contraction, which indicates the manufacturing sector is downbeat about the outlook, CIER said.

The December figure was the lowest since September 2015, when the sub-index stood at 33.1.

The think tank said that of the six industrial sectors covered by the PMI, only the sub-indexes for the food/textile and transportation industries moved higher in December, while those on the electricity/machinery, electronics/optoelectronics, chemicals/biotech, and basic raw materials industries moved lower.

Only the food/textile industry was in expansion mode, the think tank said.

As for the NMI, CIER said only one of the sub-indexes for its four major factors on business activity/production moved up by 4.8 from a month earlier to 54.2 in December.

The sub-indexes for new orders, employment and suppliers' deliveries moved lower by 1.9, 5.5 and 0.6, respectively, from a month earlier to 50.4, 50.4 and 51.2 in December, CIER said.

All four factors were in expansion mode last month, CIER added.

Source: Focus Taiwan News Channel