Taiwan October PMI hits 50 amid cautious outlook ahead of U.S. election

Taipei, Nov. 1 (CNA) Taiwan's October purchasing managers' index (PMI) only improved slightly compared with September, amid cautious sentiment ahead of next week's U.S. presidential election, the Chung-Hua Institution for Economic Research (CIER) said Friday

The headline PMI, which measures manufacturing activity, hit 50, the cutoff between expansion and contraction in the manufacturing sector on a scale up to 100, in October, up from 49.2 in September, according to the local economic think tank.

The PMI fell below 50 in September and ended a four-month expansion streak in the manufacturing sector since May, which followed 14 months of contraction.

The monetary easing measures introduced by major economies around the world have boosted stock markets, but weaker-than-expected sales of consumer electronics, and a slowdown in the shipment of artificial intelligence (AI) products due to a high base of comparison cast a shadow over Taiwan's export-oriented economy, CIER said in a statement.

Businesses are still waiting to see the impact of the U.S. interest rate cuts in September and the results of the U.S. elections on Nov. 5, CIER Chairman Lien Hsien-ming (連賢明) told reporters.

The election is expected to impact Taiwan's manufacturing sector, especially the semiconductor industry, Lien said.

Four of the six broad industries CIER monitors reported contraction partly due to the pessimistic outlook for the next six months, according to the statement.

The four industries are the chemical, biological and medical industry; the electronic and optical industry; the basic materials industry; and the transportation equipment industry, according to the statement.

On the other hand, the PMI for the food and textiles industry rose from September's 47.8 to 50.4 in October, while the electrical and machinery equipment industry PMI hit 53.6 in October, up from 49.4 in the previous month, according to CIER.

The service sector saw the 24th consecutive month of expansion in October, as the nonmanufacturing index (NMI) rose to 53.8 from September's 53.3, data released by CIER showed.

The higher reading resulted from an increase in business activities in the hospitality, retail, and financial sectors, thanks to the demand created by conferences and year-end corporate events, department store sales in the second half of the year, and booming stock markets, CIER said.

However, CIER said the 0.5 increase in NMI represented the slowest growth since March, as the business outlook subindex dropped below 50 for the first time over the past 12 months and the subindex of new orders fell to 51.1.