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Taiwan's Manufacturing Activity Contracts

2020/05/05 | By

Taipei, Manufacturing activity in Taiwan contracted in April because of the COVID-19 pandemic's impact on global demand, hurting Taiwan's export-oriented manufacturers, the Chung-Hua Institution for Economic Research (CIER) said Monday.

Taiwan's Purchasing Managers' Index (PMI) for April fell 5.5 points from a month earlier to 47.6, the steepest monthly decline since the think tank started to release the index in July 2012, according to data compiled by the CIER.

In the service sector, the non-manufacturing index (NMI) rose 0.2 from a month earlier to 42.50 in April, but it continued to signal contraction for the third consecutive month.

For the PMI and NMI, readings above 50 indicate expansion or growth, while those below 50 represent contraction.

In April, the sub-index for new orders, one of the major factors in the PMI, fell 13.0 from a month earlier to 37.1, another decline that was the steepest since the index was first launched.

The sub-index for production fell 9.3 from a month earlier to 40.2 in April, marking the fourth consecutive month of contraction, while the sub-indexes for employment, supplier deliveries and inventories also dropped 2.7, 2.1 and 0.4, respectively, to 46.5, 63.8 and 50.5.

In addition, the sub-index for the business outlook over the next six months fell 3.0 from a month earlier to 25.7, CIER said.

Chen Hsin-hui (陳馨蕙), a TIER economist, told reporters that the COVID-19 contagion has affected supply due to massive lockdowns in many major economies, while demand has also been hurt by a decline in consumption caused by the disease.

She cited a survey conducted by the think tank as saying orders received by the local manufacturing sector in April fell "significantly" from March.

In April, the sub-indexes for the survey's six major industries -- chemical/biotech, food/textiles, basic raw materials, electricity/electrical equipment, transportation instruments, electronics/optoelectronics industries -- all moved lower in April.

In the service sector, the sub-index for employment rose 1.5 from a month earlier to 48.4 in April, while the sub-indexes for business activity, new orders and supplier deliveries fell by 0.1, 0.3 and 0.2, respectively, to 33.4, 35.5 and 52.8.