Taiwan: Manufacturing sector growth eases further in May
June 1, 2017
Operating conditions in Taiwan’s manufacturing sector continued to lose momentum in May due to weaker production growth. The Manufacturing Purchasing Managers’ Index (PMI), reported by Nikkei and IHS Markit, edged down to 53.1 from 54.4 in April, marking a seven-month low. However, the result remains above the 50-point threshold, which separates expansion from contraction in domestic manufacturing activity.
Overall, Taiwanese manufacturers faced robust demand conditions across domestic and international client bases. Total new work growth accelerated in May, supported by a strong rise in new export work. As a result, companies hired new staff and boosted their purchasing activity, albeit at slower rates than in April. Nonetheless, shortages at vendors prompted inventories of purchased items to fall for the first time since August 2016, while inventories of finished goods also declined at the sharpest pace since October 2015. Meanwhile, input costs rose at the slowest rate in nine months, easing some of the cost pressure, and consequently companies increased their prices only marginally. The loss of momentum went hand-in-hand with a dip in business confidence, which nonetheless remains strong overall.
Author: Nihad Ahmed, Economist