March PMI contracts

07 April, 2023

By ECCT staff writers

Taiwan’s seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) fell into negative territory in March after climbing above the neutral 50 level in February for the first time in seven months. The March PMI fell by 4.1 points to 47.3% according to a news release by the Chung-Hua Institution for Economic Research (CIER). CIER attributed the contraction to two main factors, namely that 1) firms traditionally rebuild inventory after the Lunar New Year holidays, and this year the inventory replenishment occurred in February given the late-January end to this year’s holiday and 2) the collapse of regional banks in the United States led to liquidity risks, which had a negative impact on market raw material price quotations and demand expectations.

Among the five constituent indicators, seasonally adjusted new orders and manpower employment showed contraction. Order visibility remains poor as reflected in the subindex of new business, which fell 6.6 points to 44.5, Meanwhile, the subindex on industrial output tumbled 10.4 points to 52, while the employment sub-index lost 3.4 points to 45.5, indicating that firms reduced their capacity and payrolls to cut operational costs and support selling prices, according to CIER.


Broken down by industry sector, three major industries continue to report PMI expansion, namely, the basic raw materials industry (which rose to 56.5), food and textile industry (53) and chemical and biotechnology medical industry (50.8). However, the electricity and machinery equipment industry (47.7) and the electronics and optical industry (48.9) continued to report contractions.

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