The S&P Global Taiwan Manufacturing Purchasing Managers’ Index (PMI) was 51.5 last month, up from January’s 51.1, remaining in expansion territory for the 11th consecutive month, as demand for electronics picked up in the US and Europe, the international market intelligence service provider said yesterday.
The latest data suggested an improvement in Taiwanese manufacturers’ operations on the back of faster sales, production and inventory growth, S&P Global said, citing a monthly survey of local companies.
“Taiwan’s manufacturing sector was revitalized in February, posting faster increases in crucial barometers such as production, output, purchasing and inventories,” S&P Global Market Intelligence principal economist Joe Hayes wrote in a statement.
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Taken in tandem with a pickup in business confidence, the latest PMI survey results portray a positive near-term outlook, Hayes said.
PMI data aim to capture the pulse of the manufacturing industry, with values of 50 and higher indicating expansion, while values below the threshold suggesting contraction.
Sales growth was solid overall and slightly more robust than in January, thanks to rising demand from domestic and international customers, S&P Global said.
The uptick in new orders was particularly noticeable with customers in Europe and the US, it said.
Consequently, productivity displayed better momentum and output was higher, S&P Global said, adding that firms purchased additional inputs and stockpiled resources in response to greater business needs.
That explained why buying activity rose markedly, leading to a fourth consecutive month of expansion in preproduction stocks, it said.
Some companies showed eagerness to obtain materials ahead of anticipated sales, it added.
However, manufacturers in Taiwan reported a fractional drop in their workforces, which firms attributed to difficulty in filling positions.
In turn, backlogs of work rose for 10 months running and capacity pressures built up, S&P Global said.
Challenges filling vacancies had persisted for six consecutive months and cut across the industry, Hayes said.
That firms are struggling to recruit might restrict the strength of any upturn, he said.
Paradoxically, production growth would have further roadway if orders were to taper off, given current backlogs, which have risen for the past 10 months, Hayes said.
Looking ahead, Taiwanese manufacturers are optimistic of higher production levels over the next 12 months and the degree of optimism is the greatest since June last year, S&P Global said.
Bullish sentiment reflected positive demand projections, as Taiwan is home to the world’s major suppliers of critical electronic components used in artificial intelligence products, smartphones and notebook computers, it said.
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