Taiwan PMI in expansion mode for 3rd month in July

Taipei, Aug. 1 (CNA) Taiwan's manufacturing activity remained in expansion mode for the third consecutive month in July, but slowed down from a month earlier, the Chung-Hua Institution for Economic Research (CIER) said Thursday.

The purchasing managers' index (PMI), a key economic indicator comprised of monthly reports from and surveys of private sector manufacturing firms, stood at 52.2 in July, down by 1.5 percentage points from June, the think tank said.

For the PMI and NMI (non-manufacturing index), readings above 50 indicate expansion, while those below 50 represent contraction.

CIER Chairman Lien Hsien-ming (連賢明) said most companies had turned "cautiously optimistic" in July from being "very optimistic" in the previous months.

Lien ascribed the July PMI fall to uncertainties that could arise from the U.S. November presidential election and the impact of extreme climate in China on certain Taiwanese companies and industries.

Looking to the second half of the year, he said the PMI was not expected to suddenly dip, as companies would need to wait for more detailed information before making business decisions.

However, the CIER chairman warned that uncertainties related to the U.S. presidential election could impact the development of the domestic semiconductor and electronics industries.

He also said the pace at which the U.S. Federal Reserve implements interest rate cuts will affect decisions made by other central banks.

CIER economist Chen Hsin-hui (陳馨蕙) said certain industries appeared to have made adjustments due to geopolitical variables, including the upcoming U.S. presidential race.

For example, the main raw materials PMI contracted in July, while the electrical and machinery equipment PMI fell again after a short-lived expansion in June, Chen said.

Meanwhile, the NMI, which measures the economic conditions and performances of service-based companies, dropped by 1.3 percentage points to 57.3 in July despite remaining in expansion for the 21st consecutive month, due to a poorer stock market performance since mid-July.