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.
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
Handset camera lens maker Largan Precision Co (大立光) on Sunday reported a 6.71 percent year-on-year decline in revenue for the third quarter, despite revenue last month hitting the highest level in 11 months. Third-quarter revenue was NT$17.68 billion (US$581.2 million), compared with NT$18.95 billion a year earlier, the company said in a statement. The figure was in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$17.9 billion, but missed the market consensus estimate of NT$18.97 billion. The third-quarter revenue was a 51.44 percent increase from NT$11.67 billion in the second quarter, as the quarter is usually the peak
Nvidia Corp’s major server production partner Hon Hai Precision Industry Co (鴻海精密) reported 10.99 percent year-on-year growth in quarterly sales, signaling healthy demand for artificial intelligence (AI) infrastructure. Revenue totaled NT$2.06 trillion (US$67.72 billion) in the last quarter, in line with analysts’ projections, a company statement said. On a quarterly basis, revenue was up 14.47 percent. Hon Hai’s businesses cover four primary product segments: cloud and networking, smart consumer electronics, computing, and components and other products. Last quarter, “cloud and networking products delivered strong growth, components and other products demonstrated significant growth, while smart consumer electronics and computing products slightly declined,” compared with the
The US government on Wednesday sanctioned more than two dozen companies in China, Turkey and the United Arab Emirates, including offshoots of a US chip firm, accusing the businesses of providing illicit support to Iran’s military or proxies. The US Department of Commerce included two subsidiaries of US-based chip distributor Arrow Electronics Inc (艾睿電子) on its so-called entity list published on the federal register for facilitating purchases by Iran’s proxies of US tech. Arrow spokesman John Hourigan said that the subsidiaries have been operating in full compliance with US export control regulations and his company is discussing with the US Bureau of
RSS