Taipei, Taiwan's manufacturing activity continued to expand in August but the pace was the slowest for 19 months, the Chung-Hua Institution for Economic Research (CIER) said Monday.
With orders received by local manufacturers on the decline, CIER, one of the leading think tanks in Taiwan, said the Purchasing Managers' Index (PMI) for August fell 0.1 from a month earlier to 56.0, the lowest since January 2017, when the PMI stood at 53.2.
According to CIER, the non-manufacturing index (NMI) for the service sector in August also fell 4.4 from a month earlier to 52.6.
In both the PMI and NMI, readings above 50 indicate expansion or growth, while those below 50 represent contraction.
CIER President Wu Chung-shu (???) said at a press conference that new orders and new export orders received by local manufacturers as well as manufacturing sector sentiment about the business climate over the next six months weakened from a month earlier in August.
Those three factors are expected to serve as important indicators as to whether the strength of the expansion will continue to slow, Wu said.
Commenting on the manufacturing sector's weaker sentiment on the business climate, CIER economist Chen Hsin-hui (???) said the change reflects rising concerns over trade friction between the United States and China, with Washington set to slap tariffs on US$200 billion worth of Chinese goods.
Of the five major factors in the August PMI, only the sub-indexes for employment and inventories moved higher from a month earlier by 2.1 and 0.3, respectively, to 54.7 and 55.4, CIER said.
On the other hand, the sub-indexes for new orders, production and suppliers' deliveries moved lower by 0.4, 0.1 and 2.5, respectively, to 56.3, 58.7 and 54.7 in August, CIER said. However, the three sub-indexes still remained in expansion mode, the think tank's data showed.
In addition, CIER said the sub-index gauging business climate over the next six months fell 1.4 from a month earlier to 54.1.
The think tank said of the six industries covered by the PMI, only the sub-indexes for the electronics/optoelectronics and chemicals/biotech industries moved higher in August, while those for the food/textiles, basic raw material, transportation and electricity/machinery industries moved lower in the month.
As for the NMI, CIER said, the sub-indexes for three of its four major factors -- business activity/production, new orders and employment -- fell 7.0, 8.9 and 2.6, respectively, from a month earlier to 50.2, 51.7, and 55.3 in August, though the three remained in expansion mode.
The sub-index for suppliers' deliveries was the only one of the four to move higher by 1.1 from July to 53.4 in August, CIER said.
Looking ahead, Wu said the local economy is expected to feel the pinch as a result of external factors such as U.S. trade policy and the rate hike cycle implanted by the U.S. Federal Reserve.
Source: Focus Taiwan News Channel