Taiwan: Manufacturing PMI points to another solid expansion in activity in October
November 2, 2020
The manufacturing Purchasing Managers’ Index (PMI), released by IHS Markit, ticked down to 55.1 in October, from 55.2 in September—which had marked the best result in two-and-a-half years. As a result, the PMI remained well above the critical 50-threshold, pointing to a robust improvement in operating conditions in the Taiwanese manufacturing sector at the outset of Q4.
October’s strong result was chiefly driven by further improvements in output and new business. Production expanded at the fastest pace since December 2016, bolstered by rising inflows of new work and the resumption of projects previously suspended due to the pandemic. Similarly, new orders gained traction and rose at the fastest pace since January 2018 amid booming demand from China, Europe, Japan and the U.S.
In turn, manufacturers ramped up their buying activity and backlogs rose strongly. On a slightly less positive note, companies reduced their staffing numbers in October, largely opting not to replace voluntary leavers, while business sentiment edged down due to uncertainty due to Covid-19. Lastly, on the price front, despite sharply rising input costs, firms increased output charges only marginally due to strong market competition.
Commenting on the release, Annabel Fiddes, associate director at IHS Markit, said:
“Latest PMI data showed that growth momentum continued to build across Taiwan's manufacturing sector […]. However, there remain downside risks to the outlook, which largely stem from uncertainty due to the recent rise in COVID-19 virus cases across a number of countries. Subsequently, business confidence softened since September, while employment levels dipped slightly”.
Author: Almanas Stanapedis, Economist