Taiwan: Manufacturing PMI moderates in September
October 1, 2021
The IHS Markit Manufacturing Purchasing Managers' Index (PMI) fell to 54.7 in September from August's 58.5. September's result marked the worst reading since August 2020. As a result, the index remained above the 50-threshold, pointing to a continued, albeit moderating, improvement in business conditions from the previous month.
The slowdown was driven by weaker growth in output and new work amid raw material shortages and supplier delays. Meanwhile, purchasing activity grew at a slower pace, albeit still robust, owing to firms’ effort in building buffer stocks against the supply chain disruptions. Meanwhile, inventories of finished items grew at the fastest pace in seven months amid difficulties in shipping due to delays and container shortages. Turning to prices, higher input costs stemming from scarcity and higher shipping fees were promptly passed on to clients, via rising output prices.
On the outlook, Annabel Fiddes, economics associate director at IHS Markit, commented:
"It will be crucial for supply chains to improve in order for operations to fully normalise and for a sustained economic recovery to get underway. At the same time, the pandemic continues to cloud the outlook and adds a question mark over when this can happen.”
Author: Frederico Teixeira de Abreu, Junior Economist