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Taiwan manufacturing sector slows in April as pandemic hits orders

Kathrin Hille in Taipei

Taiwan’s manufacturing sector slowed sharply in April, as the blow the coronavirus pandemic is dealing to the global economy is causing a drop-off in demand for its exports.

Two purchasing managers’ indices (PMI) published on Monday turned negative, reflecting record drops in output and new orders at manufacturing companies last month.

The IHS Markit Taiwan Manufacturing PMI dropped from 50.4 in March to 42.2 in April, its lowest level since May 2009 when the economy was reeling from the global financial crisis.

The PMI compiled by the Chunghua Institution for Economic Research (CIER), the Taiwan government’s macroeconomic think-tank, dropped from 53.1 in March to 47.6 in April, the fastest slide since the institute started the index in 2012.

A PMI reading below 50 points to a contraction.

The negative readings highlight the risks for Taiwan’s economy even though its successful containment of the pandemic has left its domestic economy less affected than those in countries with lockdowns. Gross domestic product expanded by 1.54 per cent compared with the same period last year, according to the government’s initial reading published last week.

“Output and new orders both fell at the quickest rates since the depths of the global financial crisis in January 2009, with many firms noting that lockdowns across key export markets in Europe and the US had weighed heavily on performance,” said Annabel Fiddes, Associate Director at IHS Markit.

“The virus, which has caused mass company closures and travel restrictions across a number of nations, also meant that supply chains came under greater pressure, with the latest survey pointing to the sharpest increase in delivery times since the survey began in 2004.”

According to the CIER PMI, only the chemical and pharmaceutical and electronics industries continued to grow last month. The transport machinery industry and power and tool machinery sectors showed the sharpest drop.

According to the institute’s service PMI, also published on Monday, the service sector remained in contraction.