The Taiwan manufacturing purchasing managers’ index (PMI) climbed to a decade high of 60.4 last month on the back of improvements at home and abroad, while inventory and container shortages threatened production capability, an IHS Markit survey showed yesterday.
The latest PMI reading, the strongest since April 2010, advanced 60.2 from January, signaling further improvement in operating conditions.
“Taiwan’s manufacturing sector [last month] continued to enjoy its best period of growth for a decade,” IHS Markit associate director Annabel Fiddes said in a statement.
Photo courtesy of the New Taipei City Government via CNA
“Activity across the sector will continue to expand in the months ahead given the steep increases in new work and purchasing activity,” Fiddes said.
PMI figures aim to capture the health of the manufacturing industry, with figures above 50 indicating business expansion and values below the threshold suggesting contraction.
A rapid increase in new work accounted for the upturn last month and firms said that there was a rise in demand, particularly from China, Europe and the US, Fiddes said.
That explained why new orders and export sales expanded at the second-quickest rates since January 2011, she said, adding that output and employment improved, as new work and efforts to expand production lines helped boost staff numbers.
Despite additional workers, companies said that there was sustained pressure on capacity, as unfinished work continued to increase at a marked rate, the report said.
Input costs continued to spike, leading to higher selling prices as firms passed part of the added cost on to customers, it said.
Still, supply chain delays deteriorated at the fastest pace on record amid stock shortages and shipping-related delays, it said, adding that companies frequently complained about suppliers’ low stock levels, freight container shortages and delayed shipping schedules.
Supply chain difficulties and rising demand prompted manufacturers to continue to build up stock levels, it said.
Inventories of inputs expanded at the quickest pace for nearly a decade, while stocks of finished goods increased at the fastest rate in more than four years, the survey said.
Firms were generally optimistic that customer demand would rise further once the COVID-19 pandemic ends, although the degree of confidence slipped to a three-month low, it said.
Despite the improving PMI data, there remain some areas of concern that could weigh on overall performance, Fiddes said.
If container shortages and supply chain delays persist, it could limit production capabilities and delay the delivery of products to clients, she said.
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