Taiwan’s manufacturing purchasing managers’ index (PMI) last month expanded for the sixth straight month, despite the Middle East conflict, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The gauge came in at 55.4, down 3.1 points from February, but still above the 50 mark, the Taipei-based think tank said.
A reading above 50 indicates expansion, while a figure below that threshold signals contraction.
Photo: Liao Chia-ning, Taipei Times
CIER president Lien Hsien-ming (連賢明) attributed the 3.1-point decline to the intensifying Middle East conflict, which has driven up global commodity prices and disrupted supply chains.
The impact has been particularly pronounced in chemical-related industries, where rising oil prices have rapidly filtered through production chains.
“Price increases have spread from crude oil and naphtha downstream to key petrochemical products,” Lien said, adding that prices for basic chemicals such as ethylene, plastics and solvents have surged sharply.
Some suppliers have even suspended quotations or issued force majeure notices.
Upstream producers have also begun selectively allocating supply by raising prices, imposing quotas and delaying shipments, which reflects tightening market conditions and the shift in bargaining power toward sellers, Lien said.
As a result, the basic materials sector swung from contraction to expansion, jumping 15.3 points to 60.5, the fastest pace of growth since May 2022, CIER data showed.
However, the outlook for the chemical industry deteriorated sharply, with its six-month outlook plunging about 20 points, as companies turned more cautious about future demand should hostilities ease, the institute said.
The survey also showed geopolitical tensions disrupting maritime shipping capacity. The supplier delivery time index climbed to 66.3, the fastest increase since May 2022, indicating lengthening delivery times.
Meanwhile, the raw materials price index surged to 86, the highest level in nearly two years.
Despite these pressures, demand tied to artificial intelligence and semiconductor supply chains remained robust, helping support overall manufacturing activity, Lien said.
Technology companies have experienced relatively limited disruption compared with industries more exposed to petrochemical inputs, he added.
Still, business sentiment for the coming months cooled slightly. The six-month outlook index slipped to 61, suggesting that while manufacturers still expect expansion, confidence has weakened amid global uncertainty.
Taiwan’s energy pricing adjustment mechanism has helped cushion the broader economy from rising energy costs, Lien said.
“If the geopolitical conflict proves brief, the overall economic impact should remain manageable,” he said.
The institute expects the conflict to settle quickly, citing geopolitical considerations — including the upcoming US midterm elections — that could encourage a swift resolution.
Separately, Taiwan’s non-manufacturing sector continued to grow steadily, with the non-manufacturing index rising 0.9 points to 54.3 last month — its 13th consecutive month of expansion, the institute said.
While service-sector activity remained stable, businesses are closely monitoring geopolitical developments and commodity price movements for signs of further disruption, Lien said.
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