Taiwan: Manufacturing PMI falls sharply in February; slips into contractionary territory
March 2, 2020
The manufacturing Purchasing Managers’ Index (PMI), reported by IHS Markit, fell to 49.9 in February from 51.8 in January. As a result, the index dipped marginally below the 50-threshold signifying a slight decrease in manufacturing conditions compared with the previous month.
The slump was driven by falling production and lower new orders, both of which fell for the first time in three months, as coronavirus-related disruptions negatively affected the manufacturing sector’s performance. The prolonged shutdown of factories in China dragged heavily on supplier performance and contributed to confidence levels dropping to their lowest since mid-2015. On the price front, input cost inflation slowed somewhat in February, while output prices continued their decline as firms sought to remain competitive.
Commenting on the short-term outlook, Annabel Fiddes, principal economist at IHS Markit, noted:
"It seems likely that Taiwan's economic performance will be disappointing for the first quarter as a result of the prolonged factory shutdown across its biggest trading partner, China. It will be important to monitor whether the government's recently announced $2 billion spending package to help cushion the impact of the coronavirus will help the economy get back on its feet soon."
Author: Stephen Vogado, Economist