IHS Markit’s Taiwan manufacturing purchasing managers’ index (PMI) last month climbed to a decade-high of 59.4 as firms reported a sharp increase in new business and output amid soaring input costs and worsening supply delays.
PMI figures seek to show the health of the manufacturing industry, with scores above 50 indicating expansion and values below indicating contraction.
Last month’s score rose from 56.9 in November, signaling the strongest pickup in operating conditions since January 2011, the monthly survey showed on Monday.
Photo: Sam Yeh, AFP
“Taiwan’s manufacturing sector had a strong end to last year, with firms registering the steepest upturns in output and new orders for nearly a decade,” IHS Markit economics associate director Annabel Fiddes said in a statement.
Rising inflows of new work prompted firms to expand purchasing activity at a rapid rate, Fiddes said.
The new business gauge expanded at the sharpest rate in a decade, with firms citing a further rebound in sales as the effects of the COVID-19 pandemic continued to unwind, she said.
Growth in new exports also hit a near-decade high, as companies reported stronger demand in many of the nation’s major external markets, the survey found.
The data also pointed to renewed increases in pre and post-production items, as firms stockpiled goods amid strained supply chains and greater customer demand.
Although firms registered steeper increases in production and sales, they adopted a cautious approach to staffing levels, which drove a rapid increase in work backlogs, IHS Markit said, adding that backlogs increased at the sharpest rate since February 2018.
Stock shortages, limited capacity and port delays led to a substantial lengthening of suppliers’ delivery times, it said.
Supply shortages and delays contributed to a substantial rise in input costs, which led to a marked increase in output charges, it added.
Average input prices rose at the steepest rate since December 2016, driven by increased raw material prices and stock shortages, IHS Markit said.
To help maintain profit margins, firms passed on higher operating expenses to customers by raising selling prices at the quickest pace since March 2011, it said.
Encouragingly, firms reported greater demand at home and abroad, with growth in export sales rising to its highest level in nearly 10 years, Fiddes said.
Expectations that global demand conditions will continue to improve over the months ahead boosted business confidence to a 33-month high, she said.
However, supply chain disruptions, rising costs and the resurgence of COVID-19 infections in several export markets could weigh on growth, she added.
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