Taiwan: Manufacturing PMI soars to near-decade high in December
January 4, 2021
The manufacturing Purchasing Managers’ Index (PMI), released by IHS Markit, jumped to 59.4 in December from 56.9 in November, marking the best reading since January 2011. As a result, the PMI moved further above the critical 50-threshold, suggesting that operating conditions in the Taiwanese manufacturing sector improved sturdily at the tail end of last year.
December’s upturn was spearheaded by accelerating manufacturing production which was the fastest in nearly a decade. Stronger output growth chiefly stemmed from soaring new business which also expanded at the quickest rate since the start of 2011 on rebounding domestic sales and stronger demand across most major external markets. That said, the rate of job creation eased in December and was moderate overall, leading to the sharpest increase backlogs of work in nearly three years. Lastly, input costs rose at the steepest rate in four years in December, chiefly reflecting rising raw material prices and stock shortages. Nevertheless, firms were able to maintain profitability by passing on higher costs to clients by raising their selling prices at the fastest pace since March 2011.
Commenting on the result and outlook for 2021, Annabel Fiddes, associate director at IHS Markit, said:
“Taiwan's manufacturing sector had a strong end to 2020, with firms registering the steepest upturns in output and new orders for nearly a decade […] While the data suggest that improved demand conditions will support a further expansion of the sector as we head into 2021, supply chain disruptions, rising costs and the resurgence of COVID-19 virus cases in a number of export markets could weigh on overall growth in the near-term."
Author: Almanas Stanapedis, Research Team Manager