Taiwan’s manufacturing activity continued to expand in May, but the non-manufacturing sector turned to contraction, as domestic demand fell due to the COVID-19 outbreak, the Chung-Hua Institution for Economic Research (CIER) said Tuesday.
The Purchasing Managers’ Index (PMI) fell 2.7 points in May from a month earlier to 66, due to concerns over soaring prices and shortages of raw material, power and water supplies amid the COVID-19 pandemic, but it remained above 60 for the seventh consecutive month, according to CIER.
The PMI was 68.7 in April, the highest since the think tank started to release such statistics in July 2012, its data showed.
In the service sector, the non-manufacturing index (NMI) dropped 10.9 in May from a month earlier to 49.2, snapping an 11-month expansion streak, as domestic demand dropped amid Taiwan’s worse COVID-19 outbreak and its implementation of a nationwide Level 3 alert for the disease, according to CIER.
For the PMI and NMI, readings above 50 indicate expansion, while those below 50 represent contraction.
CIER President Chang Chuang-chang (張傳章) said the decline in the PMI in May can be attributed mainly to obviously modest expansion in three of the five factors — new orders, industrial production and employment.
Although the sub-indexes on new orders and industrial production both showed expansion in May for the 11th straight month, the figures fell 3.9 and 5.1 points, respectively, from a month earlier to 67.7 and 65.8, according to the data.
The employment sub-index dropped 4.2 in May from a month earlier to 59.6.
The sub-index on supplier deliveries in May remained unchanged at 74.8, while that on inventories dipped 0.1 from a month earlier to 62.2, according to CIER data.
However, the sub-index on the business outlook for the manufacturing sector over the next six months plunged 12 points in May from a month earlier to 67, ending a four-month streak of strong expansion in which it remained above 70, Chang said.
Meanwhile, the non-manufacturing sector went from expansion to contraction in May, due to the COVID-19 outbreak, as retail and other business operations slowed down and new orders declined, he said.
The sub-indexes on business activities and new orders for the sector fell 20.7 and 19.8, respectively, to 42.8 and 45.0 in May, according to the CIER.
The sub-index for the business outlook for the non-manufacturing sector over the next six months plunged 30.1 to 37.7, after hitting a record high of 67.8 in April, according to the data.
Source: Taiwan’s manufacturing activity expands, non-manufacturing shrinks