Taipei, Feb. 5 (CNA) Taiwan's manufacturing sector remained in expansion mode in January, but the domestic economy may suffer in the first quarter of the year due to the outbreak of the 2019 novel coronavirus (2019-nCoV) in China, the Chung-Hua Institution for Economic Research (CIER) said Wednesday.
CIER data showed that the seasonally adjusted Purchasing Managers' Index (PMI) fell 4.9 points in January from a month earlier to 51.3, which was still in the expansion range.
The PMI is based on a monthly poll of executives at some 300 representative manufacturing companies and covers the areas of new orders, inventory levels, production, supplier deliveries, and employment. A score of 50 indicates no change, over 50 signals expansion, and under 50 means decline.
In January, the non-manufacturing index (NMI) for Taiwan's service sector rose by 0.9 points from a month earlier to 55.0, marking the 11th consecutive month of expansion, CIER said.
Meanwhile, economic growth in Taiwan and the rest of the world is likely to be adversely affected by the 2019-nCoV, which originated in the Chinese city of Wuhan and is spreading to other countries, Kamhon Kan (簡錦漢), head of the Institute of Economics at Academia Sinica, said at a news conference at which CIER reported the latest PMI and NMI data.
Taiwan's gross domestic product (GDP) growth may be downgraded to less than 2 percent for 2020, he said.
Last December CIER raised its 2020 forecast for Taiwan's GDP growth from 2.34 percent to 2.44 percent.
In the same news conference, CIER President Shikuan Chen (陳思寬) said that while the 2019-nCoV may hurt the domestic economy, the local manufacturing sector is likely to rebound on global demand, but recovery in the non-manufacturing sector could be slower.
In January, four of the five major factors in the PMI fell from a month earlier, with only the sub-index for supplier deliveries increasing by 4.8 to 57.1, CIER said.
The sub-indexes for new orders, production, employment, and inventories fell 6.5, 18.2, 2.2 and 2.2 respectively, from a month earlier to 55.0, 41.7, 52.8 and 50.0, but only production showed contraction, CIER said.
Among the six major industries in the PMI, only the sub-index for the chemical and biotech industry increased, while the sub-indexes for food/textiles, basic raw materials, electricity/electrical equipment, and transportation instruments, electronics/optoelectronics industries moved lower, CIER said.
As for the NMI, among the four major factors, only the one for new orders dropped in January, falling by 2.1 from a month earlier to 54.8, the data showed.
The sub-indexes for business activity, employment and supplier deliveries rose 1.5, 1.3 and 3.0, respectively, from a month earlier to 56.6, 55.3 and 53.2, all in expansion mode, according to CIER.