TAIPEI: The Nikkei Taiwan Manufacturing Purchasing Managers’ Index (PMI) fell to 46.3 last month, down from 49.3 in May, the most dramatic decline in 43 months, a survey by the Japanese media organization showed here the other day.
“The downturn in Taiwan’s manufacturing sector intensified last month as output and new orders contracted at faster paces,” said Annabel Fiddes, an economist at Markit, the UK-based financial data and marketing company that conducted the survey.
Nikkei Inc has replaced HSBC Holdings PLC in producing PMI data for the Asia region, based on monthly economic surveys compiled by Markit.
The PMI is a composite indicator of manufacturing performance derived from constituent gauges for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
A figure greater than 50 indicates improvement of the sector’s operating conditions, while a value below the neutral mark suggests deterioration, according to Markit.
FEWER ORDERS
Fiddes attributed last month’s PMI fall to fewer orders placed with Taiwanese manufacturers amid weakened global client demand.
New orders, a key source of growth for Taiwanese manufacturers, declined rapidly last month, while output contracted the most in 33 months, the survey said.
The survey showed that manufacturing employment increased last month, but the rate of job creation was modest, because an increase in staff numbers was generally linked to the filling of vacancies, not growing business demand, it said.
Meanwhile, backlogs of work fell and purchasing activity declined further last month, the survey showed.
“The finding reflects a cautious attitude by companies with regard to production plans,” Fiddes said.
If demand fails to rise, manufacturers might soon start to shed staff in line with reduced production requirements, Fiddes said.
