June PMI at 53.6
By ECCT staff writers
Taiwan’s official Purchasing Managers' Index (PMI) for June rose slightly from a month earlier by 0.1 points to 53.6. According to a news release from the Chung-Hua Institution for Economic Research (CIER), it was the 24th consecutive month that the PMI remained above the neutral level, indicating growth ahead.
However, CIER’s news release emphasised that the figure should not be interpreted too optimistically, noting that uncertainty is still high, including the trend of weak demand in the manufacturing industry, saying that there is a possibility of entering a vicious cycle of rising costs, falling selling prices, and falling demand. In addition, inventory pressure and the risk of capital disconnection have increased significantly.
According to CIER, Covid closures and control in Shanghai, China have eased, enabling companies to increase shipments. In addition, the production capacity scheduling affected by the domestic pandemic improved in June, and the transportation industry has increased production before the summer maintenance. The sub-index for production turned from contraction to expansion, rebounding 3.7 points to 51.6. However, the manufacturing industry outlook index for the next six months has contracted for two consecutive months. This time, it fell 6.9 points to 37.1 the fastest contraction rate since June 2020.
Meanwhile, CIER’s non-manufacturing index (NMI), which covers service sector activity, also moved higher by 4.6 points from a month earlier to 49.7 in June, but the index stayed in contraction mode for the second consecutive month. Optimism in the month-on-month rise may also be misplaced given too many uncertainties such as inflation, interest rate hikes, and the ongoing pandemic, which is keeping most non-manufacturing companies cautious about the future, according to CIER.