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Taiwan's July PMI shrinks for 4th month as export orders slide

Monday, August 3, 2015 - 10:07
twfactory1.jpg
An employee walks inside the China Steel production factory.

[TAIPEI] July data signalled a further deterioration in overall operating conditions for Taiwanese manufacturers, highlighting worrying economic fragility after growth in the second quarter slumped to 3-year lows in the wake of a collapse in exports.

The pace of deterioration eased slightly since June's 33-month record, but underlying activity remained at a low ebb.

Total new business and new export work both fell sharply on the month.

New export orders index fell to a 34-month low at 43.2, from 43.8 in June, prompting companies to cut their production levels again. Weaker client demand also forced firms to reduce their purchasing activity, while destocking activities persisted across the sector.

According to anecdotal evidence, weaker demand in key export markets such as China, Europe and the US was behind reduced new export business.

*Deflationary pressures intensified, with both input prices and output charges falling at faster rates.

Commenting on the Taiwan PMI survey, Annabel Fiddes, economist at Markit, said: "Taiwan's manufacturing sector had a disappointing start to the third quarter, with output, new orders and new export business all declining at historically sharp rates.

"It appears a global economic slowdown is likely to remain a headwind to growth in the second half of the year, as panellists mentioned softer demand in key export markets such as China, Europe and the US. Furthermore, reduced input buying combined with destocking activities suggests that manufacturers are prepared to make further cuts to production if weaker demand conditions persist."

About the Taiwan PMI: The data is collected by UK-based Markit Group Ltd, and the report is sponsored by Nikkei.

REUTERS