Taiwan's manufacturing activity expands for 4th straight month

Taipei, Sept. 2 (CNA) Taiwan's manufacturing activity remained in expansion mode in August for the fourth consecutive month, but many manufacturers were cautious about the business outlook for the next six months, the Chung-Hua Institution for Economic Research (CIER) said Monday.

The purchasing managers' index (PMI), a measure of the prevailing direction of economic trends in manufacturing, rose 1.4 points in August from a month earlier to 53.6, according to data from CIER, one of the leading economic think tanks in Taiwan.

In the service sector, the non-manufacturing index (NMI) did not follow the upturn in August, but rather fell 2.8 from a month earlier to 54.5, although the sector remained in expansion mode for the 22nd straight month, the data showed.

PMI and NMI readings of above 50 indicate expansion, while those below 50 indicate contraction.

While the PMI remained in expansion, the sub-index for the business outlook over the next six months fell 2.2 in August from a month earlier to 52.8, the lowest in seven months, according to the CIER data.

PMI

Speaking with reporters, CIER Vice President Wang Jiann-chyuan (王健全) said an increasing number of manufacturers had turned cautious about their operations, as an economic recovery seemed uneven.

While the development of artificial intelligence was driving high-end semiconductor and server production, mature IC technologies and old economy industries were still feeling the pinch from a supply glut and an economic slowdown in China, he said.

According to CIER, manufacturers in Taiwan were also concerned about the United States economy, adjustments in the monetary policy of the U.S. Federal Reserve, and the U.S. presidential election in November.

In August, the sub-indexes for new orders, production, employment and inventories rose 2.8, 3.5, 2.5 and 0.9, respectively, from a month earlier to 56.7, 57.4. 54.4 and 49.9, while the sub-index for supplier deliveries fell 2.6 to 49.5 in contraction mode.

Meanwhile, the sub-indexes for the basic raw materials and transportation equipment industries moved higher in August, from contraction to expansion, while the sub-index for the electricity and electric equipment industries also increased but stayed in contraction mode, CIER said.

The sub-indexes for the electronics and optoelectronics, and food/textile industries remained unchanged in August but stayed in expansion, while the sub-index for the chemical and biotech industry moved lower but also remained in expansion, the data showed.

NHI

In the service sector, the sub-indexes for business activity, new orders, employment and supplier deliveries all fell in August, by 2.4, 4.8, 1.9 and 2.0, respectively, to 57.2, 51.5, 56.3 and 52.9, according to CIER.

The sub-index for the business outlook over the next six months fell 3.2 from a month earlier to 54.6, the lowest since December 2023, which Wang said reflected an uneven recovery.

While many Taiwanese tourists were traveling overseas, the local tourism market remained in the doldrums, he said.

Wang also said that while the real estate industry in Taiwan was booming, the majority of sales were for smaller homes and offices rather than large ones.

According to CIER, the local tourism market failed to meet expectations in the summer peak season, and the volume of advertisements fell after the 2024 Olympics.

In addition, CIER said, car sales were compromised in August, which is marked as Ghost month in Taiwan, the seventh month of the Lunar calendar, and was observed from Aug. 4 to Sept. 2 this year.

In Taiwan, purchases of big ticket items such as cars and homes are considered taboo during Ghost month.