Taiwan's manufacturing expansion slows in December

Taipei, Jan. 2 (CNA) The purchasing managers' index (PMI), a key economic indicator that gauges the fundamentals of the manufacturing sector, showed a second consecutive month of expansion in December, but at a slower pace, the monthly data released Thursday showed.

The seasonally adjusted PMI compiled through monthly surveys of local businesses by the Taipei-based Chung-Hua Institution for Economic Research (CIER) hit 50.8 in December, down 0.6 from a month earlier.

PMI readings above 50 indicate expansion, while those below 50 represent contraction.

Among the five major factors in the December PMI, the subindexes for new orders and production dropped by 4.6 and 2.4, respectively, from a month earlier to 50.9 and 52.1, because of uncertainties over end-user demand, CIER said.

Employment and supplier deliveries rose by 0.8 and 4.2 from the previous month to 51.1 and 52.5, respectively. Only the inventories factor was still in contraction, following a drop of 1.2 from November to 47.4 in December, according to CIER.

Meanwhile, the subindex for the business outlook over the next six months for December fell 1.8 from a month earlier to 46.1, the largest drop since January 2024, CIER said in a statement.

It was the fourth consecutive month the business outlook subindex has been in contraction mode, according to CIER.

The December PMI figure reflects a lack of change in the overall market environment, CIER President Lien Hsien-ming (連賢明) said at a news conference in Taipei Thursday.

There were unexpectedly larger numbers of rush orders that demanded quick deliveries, instead of the regular orders local manufacturers look for during the traditional peak season in the fourth quarter, Lien said.

Some of the rush orders were placed for key electronic components, because of U.S. President-elect Donald Trump's talk about raising import duties on goods shipped to the United States, according to Lien.

The political and economic situation in the U.S. or China is not expected to become clear until after Trump takes office on Jan. 20, particularly regarding how his policies could impact different industries, Lien said.

In the service sector, the non-manufacturing index (NMI) rose 1.9 from a month earlier to 56.5 in December, marking the 26th consecutive month of expansion, the data indicated.

The subindex on business outlook over the next six months fell 0.1 from a month earlier to 50.5 in December, because of the central bank's crackdown on property speculation, but continued to expand for the 14th straight month, CIER said.

While the residential property market faced challenges, the commercial property market remained active and robust, Lien noted.