Manufacturing sector contracts in July: CIER
The Purchasing Manager Index (PMI) dipped 2.2 points to 48.6 in July indicating a contraction in the manufacturing sector, the ChungHua Institution for Economic Research (CIER, ) reported yesterday.
Among main subindices, only the employment index registered expansion during the month. The rest including new orders, production and inventories underperformed.
The PMI measures manufacturing expansion; a score above 50 represents expansion, whereas any score below indicates contraction.
The employment PMI rose to 52.9 in July, and in a sign of job market improvement, registered the fifth consecutive month of expansion, stressed CIER officials.
The other six subindices compiled by the research institute including customer inventory, raw material price and six-month economic outlook mostly contracted, indicating the subpar performance experienced by Taiwan’s manufacturing sector.
It is worth noting that the sixmonth economic outlook plummeted 10.5 points to 42.6, which is indicative of the pessimistic perspectives of surveyed enterprises.
The CIER noted however, that business environment and economic conditions often change in a flash, and firms’ future outlooks vary from month to month.
Just last month, companies surveyed were expressing optimism following an increase in the month outlook index.
Only the Food Industry Saw
The nation’s PMI began to stumble down in March, in which the score registered as high as 59.1. The trend over the past few months is a worrying sign, given the significance represented by the PMI’s trajectory, according to CIER President Wu Chung-shu ( ).
Of the six sectors studied by the CIER, only one — the food and tex- tile industry — posted PMI growth from the earlier month. Wu pointed out, however, that in fact, only the food industry saw growth.
Nevertheless, three sectors showed expansion: the chemical, biological and medical industries (50.3), the electronics and optics industries (50.6), and the food and textile industries (55.4).
The other three sectors saw contraction: the raw material industry (42.2), the transportation equipment industry (45.7), and the electrical and machinery
equipment industry (45.4).
Service Industry Expands
While the nation’s manufacturing sector contracted, the service sector encountered growth. The NonManufacturing Index edged up 1.6 points to 52.1 in July, sustaining a 12-month consecutive expansion, according to the CIER’s report.
The employment subindex outperformed again to register at 56.4, up 2.3 points from June, maintaining a full year of expansion and showing that Taiwan’s job market is equally robust in the service industry. However, the six-month economic outlook subindex is as depressing as the manufacturing sector’s; it fell 5.8 points to 39.3, indicating that businesses are still not as upbeat about the economic climate.
The construction and real estate industry and the wholesale industry are the only two service sectors that faced contraction. Others, such as the food and lodging and finance and insurance industries, all reported expansions.