Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei.
Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said
Photo: Hsu Tzu-ling, Taipei Times
Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort to develop artificial intelligence applications, but Trump’s unpredictable policy stance casts a shadow over global trade, he said.
PMI data aim to assess the health of the manufacturing industry, with values of more than 50 suggesting expansion and points below the threshold suggesting contraction.
Trump is today expected to introduce reciprocal tariffs, leading businesses around the world to adopt a wait-and-see attitude, Lien said.
The reading on new orders rose 2.4 percentage points to 56.8, the fastest growth since July last year, but short orders accounted for a large chunk and many firms indicated they do not see orders beyond this month, the Taipei-based institute said.
The latest PMI data showed that the inventory subindex gathered 1.2 percentage points to 53.9, the strongest expansion since September 2022, as manufacturers engaged in more active restocking following inventory adjustments in 2023, CIER said.
Local makers also showed more confidence about their business prospects, as the six-month outlook gained 4.8 percentage points to 59.1, the institute said.
CIER researcher Chen Shin-hui (陳馨蕙), who is in charge of the PMI survey, said not all firms hold negative views of US tariffs.
Some Taiwanese firms have benefited from order transfers after Chinese suppliers came under trade restrictions, she said.
However, Academia Sinica fellow Kamhon Kan (簡錦漢) issued a cautionary note, saying that things might take a different turn next month, as Trump could threaten more tariffs, creating more uncertainty about investment destinations, in addition to Mexico and Canada.
Vietnam, a popular investment destination among Taiwanese firms, also ranks high in terms of trade surpluses with the US, Kan said.
“Whatever advantages a destination has today might be gone tomorrow,” he said.
Taiwan’s nonmanufacturing index rose 4.6 percentage points to 53.8, ending a mild contraction in February, the CIER said.
However, service providers have a conservative outlook about business over the next six months, it said.
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