Taiwan: Manufacturing PMI tumbles to over 11-year low amid coronavirus turmoil
May 4, 2020
The manufacturing Purchasing Managers’ Index (PMI), reported by IHS Markit, fell to 42.2 in April from 50.4 in March, the lowest level since January 2009. As a result, the index dropped significantly below the 50-threshold signifying a marked deterioration in manufacturing conditions compared with the previous month.
The downturn was driven by sharp declines in both output and new orders—each falling at the fastest rate in over 11 years—as the coronavirus pandemic severely hampered operating conditions in April amid slackening demand. Furthermore, supply chain disruption significantly increased lead times for inputs, with firms cutting back both purchasing activity and employment levels.
On the price front, lower commodity prices translated into the first drop in input price in nine months, while output costs decreased at the fastest rate in nearly five years. Looking ahead, the outlook for the coming year darkened significantly, with the degree of pessimism among firms the most severe since the series began in 2012.
Commenting on the reading, Annabel Fiddes, principal economist at IHS Markit, noted:
“The COVID-19 pandemic led to a substantial deterioration in the health of Taiwan's manufacturing sector in April. Output and new orders both fell at the quickest rates since the depths of the global financial crisis in January 2009, with many firms noting that lockdowns across key export markets in Europe and the US had weighed heavily on performance. The virus […] also meant that supply chains came under greater pressure, with the latest survey pointing to the sharpest increase in delivery times since the survey began in 2004.“
Author: Stephen Vogado, Economist