Taiwan: Manufacturing PMI deteriorates in August
September 2, 2019
The manufacturing Purchasing Managers’ Index (PMI), reported by IHS Markit, fell to 47.9 in August from 48.1 in July, and remained below the 50-point threshold that separates contraction from expansion for the eleventh month running.
Manufacturers struggled in August as new work orders fell substantially in the month and exports fell at the fastest pace in over four years; on the back of this, output decreased at a quicker clip than in July. Despite the downturn, manufacturers were more optimistic about the business outlook in August, partly on expectations that greater investment and new product offerings will support output. As a result, businesses increased headcounts slightly for the second straight month. More staff, coupled with fewer new orders, helped firms reduce unfinished work levels in August. Meanwhile, pre- and post-production goods fell in August, although post-production stocks decreased at the most modest pace in four months, and both input costs and output prices were cut again.
Reflecting on the reading, Annabel Fiddes, principal economist at IHS Markit, said:
"PMI data for August showed that Taiwan's manufacturing sector continued to struggle in the face of a slowing global economy and weakening demand across key markets. Firms cut production for the twelfth month in a row amid a further steep drop in overall sales. Exports remained a key source of weakness.” Fiddes concluded, “risks remain skewed to the downside due to the ongoing China-US trade dispute and increasing political and economic uncertainty across the globe.”
Author: Edward Gardner, Economist