Taiwan: Manufacturing PMI nudges into expansionary territory in March, despite evidence of coronavirus-related downturn
The manufacturing Purchasing Managers’ Index (PMI), reported by IHS Markit, rose to 50.4 in March from 49.9 in February. As a result, the index inched marginally above the 50-threshold signifying a slight increase in manufacturing conditions compared with the previous month.
The increase appears to be somewhat misrepresentative in the context of the wider coronavirus-related economic crisis, driven as it was by a large increase in suppliers’ delivery times and a softer decline in inventories. As such, the overall expansion belied a sharp contraction in output amid falling demand at home and abroad, with reports of widespread cancelling or postponing of orders. Furthermore, firms’ pessimistic outlook for the coming year reflected expectations of further falls ahead. On the price front, input cost inflation eased while firms also cut their output prices for the 16th month running in order to maintain competitivity.
Commenting on the gloomy panorama, Annabel Fiddes, principal economist at IHS Markit, noted:
“Not only is the COVID-19 outbreak impacting demand, but supply chains are also facing severe disruptions as firms struggle to get hold of raw materials. Weak sentiment around the outlook led manufacturers to adopt more cautious approaches to hiring, purchasing and inventories, to suggest that the sector is braced for more challenging months ahead as nations around the world grapple with getting the pandemic under control.”