Man­u­fac­tur­ing sec­tor con­tracts in July: CIER

The China Post - - TAIWAN BUSINESS - BY JOHN LIU

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.

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Only the Food In­dus­try Saw

Im­prove­ment

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.

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