Taiwan’s PMI drops for 2nd consecutive month, outlook for next 6 months at a near 2-year low

The Chung-Hua Institution for Economic Research (CIER) announced on Tuesday (May 3) that Taiwan’s manufacturing Purchasing Managers’ Index (PMI) fell by 1.5 percentage points to 56.3% in April, its second consecutive decline. 

The decrease originates from a contraction in new orders, the first since July 2020. The outlook for the next six months could see its slowest expansion since August 2020. 

Although manufacturing companies are still optimistic about future growth, some manufacturers have expressed concern about the impact of soaring commodity prices and China’s strict lockdown policy. 

In terms of the five PMI components, new orders turned tighter, production, labor hiring and inventory expanded, and supplier delivery times rose. 

In particular, the new orders index contracted for the first time since July 2020, falling by 4.7 percentage points to 47.7%. 

While the production index continued to expand, it fell by 5.0 percentage points to 50.2%. 

Six major industries reported full PMI expansion in April, namely (in order of expansion rate) the chemical, biotechnology and medical sectors (62.1%), the raw materials industry (61.6%), the food and textile industries (59.6%), the electronics and optoelectonic industries (59.1%), the electricity, machinery and equipment industries (58.1%), and transportation industry (56.2%). 

Although domestic manufacturers are still optimistic about the future, some managers are concerned that geopolitical factors are pushing up raw material prices, causing costs to escalate, and that china’s lockdown policy is impacting both supply and demand. 

Of the six industries, only three expect expansion in the next six months, with the chemical and biotech medical industry (57.7%), raw materials industry (56.8%) and electronics and optoelectronics industries (52.5%) in expansion mode. 

Three industries reported a tightening outlook, with the food and textile sectors (46.3%), transportation (47.6%), and electric and machinery sectors (48.8%) ranked by their respective rate of contraction. 

— Translated by DB, cnPOST