Manufacturing activity in expansion mode for 10th straight month

Taipei, Aug. 3 (CNA) On the back of robust global demand for AI applications, Taiwan's manufacturing activity stayed in expansion mode for the 10th consecutive month in July, the Chung-Hua Institution for Economic Research (CIER) said Monday.

CIER, one of the leading think tanks in Taiwan, cited data as showing the July purchasing managers' index (PMI) in the manufacturing sector rose 0.8 from a month earlier to 61.5, the highest level since August 2021, when the index stood at 62.1.

Bucking the uptrend, the non-manufacturing index (NMI) in the service sector fell 2.6 from a month earlier to 57.3 in July but stayed in expansion mode.

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

CIER said the current AI boom pushed up new orders and production -- two of the five major factors in the July PMI -- by 2.9 and 4.0, respectively, from a month earlier to 63.3 and 62.7 in July, driving up manufacturing activity as a whole.

Among other factors, the subindex on supplier deliveries also moved higher by 0.7 from a month earlier to 67.6 in July, while the subindexes on employment and inventories moved lower by 2.4 and 0.8, respectively, to 53.0 and 61.1.

In addition, the subindex on the business outlook over the next six months rose 0.3 from a month earlier to 64.5 in July, marking the seventh consecutive month the subindex has been above 60.

Among the six major industries, the food and textile industry, the chemical and biotech industry, and the transportation industry saw manufacturing activity improve in July, while the subindexes on the electronics and optoelectronics industry, the basic raw materials industry, and the electricity and machinery equipment industry fell, but remained in expansion mode.

Commenting on the July NMI, CIER said a July decline in equity prices from June highs spooked investor sentiment and weakened faith in wealth effects.

In July, the four major factors in the NMI -- business activity, new orders, employment and supplier deliveries -- all moved lower by 3.3, 1.7, 2.3 and 3.0, respectively, from a month earlier to 59.4, 58.5 56.4 and 55.0, CIER said.

Meanwhile, the subindex on the business outlook over the next six months in the July NMI also fell 4.6 from a month earlier to 58.9, according to CIER.