Taiwan's manufacturing sector continued to expand in September, but the seasonally adjusted Purchasing Managers' Index (PMI) for manufacturing indicated that the pace of expansion has slowed, the Chung-Hua Institution for Economic Research (CIER) said Monday.
Taiwan's PMI for September fell 4.3 after seasonal adjustments from a month earlier to 57.8, according to data compiled by the CIER, a leading Taiwanese think tank.
Despite the fall, the PMI still indicated the manufacturing sector expanded for a 15th consecutive month in September, though at its slowest pace since October 2020.
Amid eased concerns over COVID-19 as new domestically transmitted cases dropped to zero, the non-manufacturing index (NMI), which covers service sector activity, rose 0.6 in September from a month earlier to 57.3.
For the PMI and NMI, readings above 50 indicate expansion, while those below 50 represent contraction.
Among the five major factors in the PMI, the sub-indexes for new orders and production moved lower by 8.8 and 5.9, respectively, to 53.5 and 57 in September.
The two sub-indexes were at their lowest since July 2020 and were the biggest contributors to the continuing fall of the PMI in September.
The sub-index on employment also dropped by 3.8 from a month earlier to 54.5 in September, the lowest since November 2020.
The supplier lead time sub-index remained above the 60-point mark for an 11th consecutive month in September due to persistent port congestion problems and material shortages despite falling 0.5 to 69.1.
Overall manufacturer inventories fell 2.3 to 55.1 in September, after peaking at 62.7 in July, also reflecting a slower pace of expansion. That combined with rising customer inventories suggested potential obstacles for future economic activity.
The sub-index for customer inventories rose for a third consecutive month in September, the first time that has happened since November 2014, hitting 51.8.
In this category, a number above 50 signals relatively high customer inventories and below 50 indicates relative low customer inventories, but they can have either positive or negative interpretations, depending on circumstances.
In this case, the rising customer inventories, coupled with a slowdown in new orders, could indicate that companies in several industries have what they need in house to meet demand and do not need to place as many new orders as anticipated, according to the CIER.
CIER President Chang Chuang-chang (???) said some manufacturers reported that their customers have started to adjust inventories to avoid the possible risk of losing money as prices for items in inventory fall.
"Overall manufacturing activity remained in expansion mode but the pace of expansion has slowed down," Chang cautioned.
In the survey of manufacturers, many said they were not purchasing items as aggressively as in the first half of the year, but were instead managing inventories to avoid the risk of price fluctuations and changes in demand, according to Chang.
The sub-index on the business outlook over the next six months in the PMI fell 5.8 to 55.5, the lowest since September 2020, according to the CIER.
Source: Focus Taiwan News Channel