Taiwan’s manufacturing sector experienced a further decline in August, marking the third consecutive month of contraction and the most rapid shrinkage since April of the previous year, according to the Chung-Hua Institution for Economic Research (CIER). The seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) dipped slightly to 47.9 from 48.0 in July, remaining below the 50-point threshold that separates expansion from contraction.
The future outlook subindex dropped by 0.7 percentage points to 37.6, reflecting ongoing pessimism among manufacturers about the next half-year. This marks the fifth straight month of declining sentiment. The weakening outlook is largely attributed to unresolved questions surrounding U.S. trade policies, including potential tariffs and the outcome of a Section 232 investigation under the 1962 Trade Expansion Act, as well as uncertain demand in international markets.
Subindices for new orders, production, employment, and inventories all continued to fall, signaling persistent caution among firms. Supplier delivery times lengthened, which typically indicates supply chain strain or reduced efficiency. Five out of six major industrial categories saw contraction: transportation equipment, basic materials, food and textiles, electrical and machinery equipment, and electronics and optical devices. The transportation sector recorded the steepest drop, with both new orders and output plunging by over 10 percentage points—likely due to market anticipation of automotive-related tariffs and tax adjustments.
Only the chemical, biotech, and medical industry showed growth during the period. All six major sectors expressed increasingly negative expectations for the coming months, primarily due to global economic instability and unclear U.S. trade directions.
Meanwhile, the non-manufacturing sector maintained expansion for the sixth consecutive month, though its index declined by 2.1 points to 50.7. This pullback stemmed from weaker activity in construction, real estate, finance, insurance, retail, wholesale, and tourism. The six-month outlook for non-manufacturing also worsened, falling 1.7 points to 38.9—the sixth successive monthly decline and the longest streak of pessimistic projections since mid-2023.
— news from Taipei Times
— News Original —
Manufacturing PMI contracts for third month
GLOOMY OUTLOOK: Firms had pessimistic views for the next six months due to uncertainties around the trade policies of the US and global demand, CIER said
By Chen Cheng-hui / Staff reporter
Taiwan’s manufacturing sector last month contracted for a third consecutive month, shrinking at its fastest pace since April last year, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The seasonally adjusted manufacturing purchasing managers’ index (PMI) fell to 47.9 from 48.0 in July, while the future outlook subindex further decreased 0.7 percentage points to 37.6, marking the fifth consecutive month of contraction, the institute said in a report.
The results signaled that sentiment across Taiwan’s manufacturing sector continued to worsen, as firms were still waiting for details on tariff negotiations with the US, the outcome of a US investigation under Section 232 of the Trade Expansion Act of 1962 and the situation in end-market demand, the institute said.
The new orders, production, employment and inventories subindices continued to fall, indicating firms’ lingering uncertainty over US tariffs and global demand, while supplier delivery time increased, it said.
Manufacturing activity contracted in five of the six major industries: transportation equipment, basic materials, food and textiles, electrical and machinery equipment, and electronics and optical devices, the institute said.
Only the chemical, biotech and medical industry expanded, it added.
The sharpest decline was in the transportation equipment industry, with new orders and production subindices plunging more than 10 percentage points, as the market anticipates potential tariffs and commodity tax cuts for the automotive sector, it said.
Firms in the six major industries all expressed greater pessimism for the next six months, the report said, which it attributed to uncertainties over the future of US trade policy and global demand.
By contrast, Taiwan’s non-manufacturing index (NMI) expanded for the sixth month in a row, although it edged down 2.1 percentage points to 50.7, a separate survey showed.
The decrease was mainly due to the sharp decline in business activity or new orders in industries such as construction, real estate, finance and insurance, retail, wholesale and tourism, the institute said.
Affected by the continued downturn in the manufacturing industry and uncertainty in the global economy, the six-month outlook for non-manufacturing sectors fell 1.7 percentage points to 38.9 last month, its sixth straight month of decline and the longest consecutive months of contraction for the outlook index since June 2023, the survey found.