In the wake of a slowdown in the global economy, manufacturing activity in Taiwan remained in contraction mode for the third consecutive month in July, according to the Chung-Hua Institution for Economic Research (CIER).
Data compiled by the CIER, one of the leading economic think tanks in Taiwan, showed Thursday that the Purchasing Managers’ Index (PMI) for July fell 0.1 from June to 48 at a time when the world economy remains roiled by trade friction between Washington and Beijing.
Bucking the downtrend in the manufacturing sector, the non-manufacturing index (NMI) for Taiwan’s service sector in July rose 2.9 from the previous month to 54.9 on the back of an increase in private consumption ahead of the Ghost Festival, the 15th day of the seventh month of the Lunar calendar, which falls on Aug. 15, the CIER said.
For the PMI and NMI, readings above 50 indicate expansion or growth, while those below represent contraction.
CIER President Shikuan Chen (陳思寬) said although the latest PMI remains in a downward trend, the magnitude of the decline moderated from May, when the PMI fell to 48.2 from April’s 51.7, and the decline in July was the same as June, indicating a reduction in the uncertainty faced by the local economy.
Steve Lai (賴樹鑫), executive director of the Supply Management Institute, described Taiwan’s economy as “stable outside and warm inside,” saying exports showed signs of picking up and domestic investment is on the increase.
Taiwan’s exports rose year-on-year in June for the first time in eight months as exports to the United States remained on the upswing, offsetting falls in exports to other major markets. In June, Taiwan’s exports rose 0.5 percent from a year earlier to US$28.39 billion after a 4.8 percent fall in May.
Lai said Apple Inc. is expected to launch new iPhones later in the quarter, and the new gadgets could spark waves of replacements in the global market, which will benefit Taiwanese suppliers.
According to the CIER, of the five major factors in the PMI, the sub-indexes for production, employment and inventories rose 0.6, 1.4 and 0.3 respectively, from a month earlier to 50.3, 50.01 and 45.8 in July. Only the inventory factor was in contraction.
However, the sub-indexes for new orders and supplier deliveries fell 0.5 and 2.1, respectively, from a month earlier to 48.2 and 45.8 in July. Both factors were in contraction, the CIER said.
In addition, the sub-index for business outlook over the next six months rose 6.4 from a month earlier to 49.3 in July, a positive development, the CIER added.
Of the six major industries in the PMI in July, the sub-indexes for electricity/machinery, food/textile and transportation moved higher from a month earlier, while those for electronics/optoelectronics, chemicals/biotech and basic raw materials industries moved lower.
The CIER said only the electricity/machinery and food/textile industries were in expansion.
As for the NMI, all its four major factors moved higher in July with the sub-index for business activity, new orders, employment and supplier deliveries up 3.1, 3.2, 2.8 and 2.4, respectively, to 56.1, 54.7, 56.6 and 52.2, with all four in expansion.
Source : http://focustaiwan.tw/news/aeco/201908020011.aspx