Taiwan's March PMI falls but stays in expansion mode

Taipei, April 1 (CNA) Taiwan's purchasing managers' index (PMI) fell from a month earlier in March amid military conflicts in the Middle East but stayed in expansion mode, the Chung-Hua Institution for Economic Research (CIER) said Wednesday.

Data compiled by CIER, one of Taiwan's leading economic think tanks, showed the March PMI, which gauges fundamentals in the manufacturing sector, fell 3.1 from a month earlier to 55.4.

In the service sector, however, the nonmanufacturing index (NMI) rose 0.9 from a month earlier to 54.3 in March and stayed in expansion for the 13th consecutive month, the data indicated.

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

CIER said the U.S.-Israel war against Iran, which erupted at the end of February, led to a price spike in petrochemical-related materials, while Taiwan continued to benefit from global strong demand for AI applications.

Among the five major factors in the March PMI, three weakened with the subindexes on new orders, production and employment down 11.6, 11.5 and 1.7, respectively, from a month earlier to 52.1, 48.3 and 51.1 in March, CIER said.

However, the subindexes on supplier deliveries and inventories moved higher by 6.8 and 2.7, respectively, to 66.3 and 59.4 in March, CIER added.

In addition, the subindex on the business outlook over the next six months fell 3.1 from a month earlier to 61.0 in March, according to the data.

Despite the fall in March PMI, the subindexes in the six major industries, including the electronics and optoelectronics, basic raw materials and electricity/machinery equipment industries, were all in expansion mode, CIER said.

However, the business outlook over the next six months in the chemical and biotechnology industry and transportation tool industry was in contraction in March, CIER added.

While the war has pushed up raw material prices, CIER President Lien Hsien-ming (連賢明) said that based on the current market forecasts, the conflict could end in mid-April or before May at the latest, so he expected the impact on the local economy could be limited.

U.S. President Donald Trump said the war with Iran would probably end in two to three weeks, while Tehran said it had "the necessary will" to bring the conflict to an end.

As for the service sector, the subindexes on employment and supplier deliveries fell 4.8 and 1.2, respectively, from February to 51.8 and 54.3 in March, while the subindexes on business activities and new orders rose 4.2 and 5.5, respectively, to 54.2 and 57.0, the think tank said.

As for the business outlook over the next six months, the subindex fell 9.7 from a month earlier to 52.4 in March, the think tank added.