The Nikkei Taiwan manufacturing purchasing managers’ index (PMI) climbed to 55.6 last month, staying above the neutral threshold for the eighth straight month despite a slowdown from December, as manufacturers saw a robust upturn in business activity fueled by demand from domestic and international clients.
A reading above 50 indicates an expansion, while one below the threshold suggests a contraction.
The latest PMI value signaled a material improvement in the health of Taiwan’s manufacturing sector, which might continue to expand in the coming months, the monthly survey sponsored by the Japanese media organization and conducted by London-based IHS Markit showed.
“Taiwan’s manufacturing sector had a strong start this year as evidenced by robust increases in output, new work and employment,” IHS Market economist Annabel Fiddes said in the report.
Local manufacturers reported an increase in new orders, buoyed by strong demand from China, Europe and the US, although the pace of expansion eased slightly from December, the survey showed.
To meet rising demand, companies stepped up purchasing to ramp up capacity and production, the report said, adding that more jobs were created during the process.
Input prices rose at the fastest pace in 57 months, while stock shortages intensified, prompting manufacturers to raise charges to protect their profit margin, the survey said.
Nearly half of all surveyed companies said their cost burden increased, attributing the trend to higher raw material prices and supply shortages.
This has deepened concern over inflation, as companies could pass on their cost burden to clients, Fiddes said.
Meanwhile, business sentiment remained highly positive, with 36 percent of surveyed firms saying they expect output to expand in the coming 12 months, the survey showed.
“As demand conditions remain favorable, Taiwanese manufacturers may continue to expand,” Fiddes said, adding that supply shortages might slow the pace a bit.
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