Taiwan's manufacturing activity continued to weaken in December with the Purchasing Managers' Index (PMI) dipping in the face of falling global demand, the Chung-Hua Institution for Economic Research (CIER) said Tuesday.
Data compiled by CIER, one of Taiwan's leading economic think tanks, showed the December PMI fell 0.2 points from a month earlier to 43.7, the sixth consecutive month of contraction and the lowest since July 2012, when the institute first began publishing the index.
As for the service sector, however, the non-manufacturing index (NMI) rose 1.1 from a month earlier to 53.3 in December, marking the second straight month of expansion, CIER said.
For the PMI and NMI, readings above 50 indicate expansion, while those below 50 represent contraction.
Speaking with reporters, CIER President Yeh Chun-hsien (???) said many in Taiwan's exports-oriented manufacturing sector had suffered inventory adjustments and enjoyed few peak season effects in the fourth quarter due to weakening global demand.
Yeh added that the local manufacturing sector had, by in large, received no new orders as a year-end buying spree failed to materialize.
Out of the five major factors in the December PMI, the sub-index on new orders fell 2.1 from a month earlier, the steepest decline, to 39.8, and sub-indexes on production and inventories also fell 0.1 each from a month earlier to 42.7 and 43.5, respectively, CIER said.
Bucking the downtrend, the sub-indexes on employment and supplier deliveries rose 0.1 and 1.4 respectively, from a month earlier to 48.4 and 44.1 in December, CIER added. All of the five factors were in contraction mode.
However, Chen Hsin-hui (???), an economist with CIER, said she was more optimistic than the PMI, adding that while some industries had seen a fall in inventories, it was possible the worst was over.
A rebound in the subindex on the business outlook over the next six months seemed to support Chen's view. The sub-index continued to move higher in December, rising 4 points from a month earlier to 29.3, while the factor remained in contraction mode.
Among the six industries in the December PMI, in the index, the sub-indexes on four -- the chemical and biotech, electronics/optoelectronics, food and textiles, and basic raw material industries -- moved higher from a month earlier in December with only the food and textile industry in expansion, CIER said.
The subindexes for the transportation equipment and electric and machinery industries moved lower in December, and both were in contraction, CIER added.
The rebound in the chemical and biotech industry showed a spike in demand for drugs from China, which just eased COVID-19 curbs so that Taiwanese suppliers saw an increase in orders, Yeh said.
Yeh said the service sector told a different story as the NMI kept moving higher on the back of growing consumer spending amid eased fears over COVID-19 in Taiwan.
In addition, peak season effects pushed up sales in the lodging and food/beverage industry as domestic demand recovered, Yeh said.
Out of the four major factors in the December NMI, the sub-index on business activity scored the highest growth of 4.6 from a month earlier to 55.9, and the sub-index on new orders also moved higher by 2.9 to 54.3, while the sub-indexes on employment and supplier deliveries moved lower by 0.9 and 2.5, respectively, to 52.2 and 50.6.
All of the four factors were in expansion.
Source: Focus Taiwan News Channel