March PMI, NMI rise, but outlook grim

Taipei,  Taiwan’s manufacturing purchasing managers’ index (PMI) and non-manufacturing index (NMI) both moved up for March amid the COVID-19 coronavirus pandemic, the Chung-Hua Institution for Economic Research (CIER) reported Wednesday.

After seasonal adjustments, the March PMI grew by 0.4 from February to 53.1, due mainly to a surge in inventory increase and supply delivery because of shipping congestion after the pandemic first erupted in China in December.

CIER Vice President Wang Jiann-chyuan (王健全) was reserved about the growth, said the growth must not be interpreted in an optimistic way.

Stressing that the impact of COVID-19 has just begun, Wang said disruptions in supply chains, movement restrictions and travel lockdowns imposed by governments across the globe and a subsiding world economy are set to sharply cut consumption, hurting export- oriented Asian countries, including Taiwan.

As it remains uncertain when the pandemic will be declared over, the six-month outlook index in the manufacturing sector fell by 8.1 to 28.7 in March — the lowest level since July 2012 — after a plummet of 26.9 in February.

The PMI is based on data compiled from monthly responses to questionnaires sent to executives in about 300 representative manufacturing companies focused on five major areas — new orders, inventory levels, production, supply deliveries and employment. A score above 50 indicates expansion, while a score below that threshold represents a decline and a reading of 50 indicates no change.

At the same time, the NMI for the local service sector rose by 1.9 from the previous month to 42.3 in March — which CIER researcher Chen Shin-hui (陳馨蕙) said was nothing to be happy about.

Based on a lower comparison basis because of the fewer work days in February, Chen said the slight bounce was insignificant — an indication that the business climate outlook is still opaque.

The six-month NMI slid by 12.9 to 13.7 in March — the steepest contraction since August 2014 — when the monthly index was first compiled.

Amid the current uncertainties, the domestic manufacturing sector seemed to have seen a silver lining, while the service sector is still stumbling in the dark owing to public fear over the COVID-19 pandemic, said Supply Management Institute in Taiwan Executive Director Steve Lai (賴樹鑫).

Source: Focus Taiwan News Channel

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