Taiwan’s manufacturing activity in contraction mode

Taipei, Dec. 8 (CNA) Taiwan's manufacturing activity showed signs of contraction in November for the first time in more than two years in the wake of a sharp fall in new orders received by the electronics sector due to weaker-than-expected global tech demand, according to the Chung-Hua Institution for Economic Research (CIER).

In addition, trade tensions between the United States and China have made many manufacturers more cautious about their business outlook, which also caused manufacturing activity to plunge into contraction mode, CIER said.

According to CIER, one of the leading economic think tanks in Taiwan, the Purchasing Managers' Index (PMI) for November fell 3.8 from a month earlier to 48.0, marking the first time for the local PMI to fall below the threshold of 50 since March 2016, when the index stood at 48.60.

In terms of the service sector, however, the non-manufacturing index (NMI) for November rose 2.4 from a month earlier to 52.3 in November, returning to expansion mode.

In both the PMI and NMI, readings above 50 indicate expansion or growth, while those below 50 represent contraction.

Wang Jiann-chyuan (???), acting president of CIER, told the press that the latest smartphones launched by Samsung Electronics Co. and Apple Inc. lacked innovative attractions, which affected their sales and also created an adversary impact on the shipments of Taiwanese suppliers in the two tech giants' supply chains.

As a result, out of the five major factors in the local PMI, the sub-index in new orders fell 3.6 from a month earlier to 47.6 after the sub-index on new orders received by Taiwanese optoelectronics makers plunged 10.6 to 39.4 in the month.

Four other major factors in the PMI also moved lower with the sub-indexes, employment, suppliers' deliveries and inventories down 6.9, 1.0, 5.7 and 2.0, respectively, from a month earlier to 49.2, 49.3, 45.9 and 48.0 in November, CIER said.

Commenting on trade disputes between Washington and Beijing, Wang said the public should stay alert over the upcoming negotiations between the top two economies after both agreed to spend 90 days to iron out their differences. But Wang said it would not be easy for the two countries to resolve their trade disputes anytime soon.

The think tank said out of the six industrial sectors covered by the PMI, only the sub-index on the electricity/machinery industry, moved higher in November but remained in contraction mode.

On the other hand, the five other sub-indexes on food/textile, electronics/optoelectronics, chemicals/biotech, basic raw materials and transportation industries fell in November, and only the food/textile industry was in expansion mode, the think tank added.

As for the NMI, the CIER said, the sub-indexes for its four major factors -- business activity/production, new orders, employment and suppliers' deliveries moved higher, up 2.8, 3.1, 2.2 and 1.6, respectively, from a month earlier to 49.4, 52.3, 55.9 and 51.8 in November.

Except for business activity/production, the three other factors were in expansion mode, according to CIER.

Source: Focus Taiwan News Channel