Taiwan PMI: Manufacturing steady as services plummet
By ECCT staff writers
Taiwan's official manufacturing purchasing managers' index (PMI) rose by 1.4 points to 52.7 in February from the month before, according to the monthly survey conducted by the Chung-Hua Institution for Economic Research (CIER). However, CIER's non-manufacturing purchasing managers' index (NMI) dropped by from 55 to 40.4, ending 11 straight months of expansion.
A reading of above 50 normally indicates a positive outlook for the next six months but February's headline number disguises some concerning trends in the sub-indices. According to CIER president, Chen Shi-kuan, demand from the supply side, instead of end-market demand, accounted for the PMI increase, reflecting the predicament facing local manufacturers. He told reporters at a press briefing that many local firms are finding it difficult to deliver goods to their clients or obtain the materials needed to produce electronic components, because of travel restrictions and a shortage of labour in China.
CIER's sub-indices on delivery time rose from 57.1 to a record of 63.1, while the index on unfinished orders climbed from 52.9 to 55.9, the institute's monthly survey showed. However, the sub-index on production came in at 48.6, while the business outlook sub-index for the next six months plunged from 63.7 to 36.8, the sharpest decline in recorded history, as firms failed to see order visibility beyond April.
The outlook for non-manufacturing, as expected, is bleak. While the overall reading was 40.4, all of the major sub-indices, business activity, new orders, employment and supplier deliveries fell. The outlook for restaurants and hotels was the worst. According to CIER, service-oriented companies are struggling to survive supply chain disruptions and reduced consumer activity as reflected in the six-month business outlook reading of 26.6, a steep decline from 56.7 a month earlier.