Taiwan: Manufacturing PMI increases to two-year high in August
The manufacturing Purchasing Managers’ Index (PMI), released by IHS Markit, rose to 52.2 in August from 50.6 in July. As a result, the PMI moved further above the critical 50-threshold, separating deterioration from improvement in operating conditions of the manufacturing sector. August’s reading marked the highest reading in two years amid the easing of global restrictions related to Covid-19.
August’s upturn was largely driven by solid increases in output and new orders, with both growing at the quickest pace in over two years, amid strengthening client demand both domestically and abroad. Moreover, manufacturers turned more optimistic over the 12-month outlook, reaching the highest level since January. On the downside, employment levels continued to decline as firms sought to reduce costs and increase productivity. On the price front, input costs increased at the sharpest rate since October 2018, owing to higher raw material prices. That said, manufacturers raised output charges only mildly in August, amid strong market competition.
Commenting on the release, Annabel Fiddes, associate director at IHS Markit, noted:
“Taiwan’s manufacturing sector had its best month for two years in August, with firms signalling stronger rises in both output and new orders. […] However, costs remain a key concern, with operating expenses rising at the quickest rate for close to two years, while companies raised their selling prices only slightly in order to remain competitive.”