Taiwan PMI January 2018

Taiwan

Taiwan: Manufacturing PMI edges up to a nearly seven-year high in January

February 1, 2018

Manufacturing activity expanded at the fastest pace in nearly seven years in January. The manufacturing Purchasing Managers’ Index (PMI), reported by Nikkei and IHS Markit, rose from 56.6 in December to 56.9 in January, the highest figure since April 2011. As a result, the PMI sits further above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has now been for over a year and a half.

Operating conditions improved in January thanks to a steeper increase in new orders and especially export sales, which expanded at the highest rate in seven years. Consequently, production levels increased for the twentieth consecutive month, albeit at a slightly slower rate than in December. Backlogs of work also increased at the sharpest pace since April 2010, despite manufacturers’ efforts to increase their payrolls.

These trends supported a sharp upswing in purchasing activity, although manufacturers’ supply chains still showed signs of strain, with delivery time for inputs increasing lead times. Moreover, suppliers’ stock shortages drove sharply higher input costs. This led selling prices to increase at the steepest pace in almost seven years. Overall, the impressive dynamics on display in January, along with robust forecasts for global trade, pushed business confidence to a nine-month high.

Annabel Fiddes, Principal Economist at IHS Markit, noted that, “The sector looks well placed to continue its current strong run of growth.” However, “a key factor that could dampen the sector’s performance is access to inputs.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 2.2% this year, which is down 0.4 percentage points from last month’s forecast. For 2018, participants expect fixed investment to increase 2.5%.


Author:, Economist

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Taiwan PMI January 2018

Note: Nikkei Taiwan Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Nikkei and IHS Markit.


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