Taipei: Taiwan's manufacturing activity remained on a growth trajectory for the second month in a row in March, as new orders, supplier deliveries, and inventories showed improvements compared to the previous month, according to the Chung-Hua Institution for Economic Research (CIER).
According to Focus Taiwan, data compiled by CIER, a leading economic think tank in Taiwan, revealed that the local March purchasing managers' index (PMI), which assesses the core health of the manufacturing sector, increased by 0.2 points from February, reaching 54.2. In the service sector, the non-manufacturing index (NMI) also experienced growth, climbing 4.6 points to 53.8 in March, signaling a return to expansion after a contraction in February. PMI and NMI values above 50 signify growth, while those below 50 indicate contraction.
At a recent news conference, CIER President Lien Hsien-ming highlighted that the uptick in manufacturing activity was driven by buyers rushing to place orders ahead of potential tariff impacts from the Trump administration. Lien noted that these orders were primarily short-term and rushed due to uncertainties surrounding U.S. tariff threats.
Among the five major components of the March PMI, the sub-indexes for new orders, supplier deliveries, and inventories saw increases of 2.4, 2.6, and 1.2 points, respectively, from the previous month, reaching 56.8, 53.4, and 53.9, all indicating expansion. Conversely, the sub-indexes for production and employment decreased by 4.1 and 1.0 points, respectively, but still remained in expansion at 55.8 and 51.0.
The business outlook for the next six months also improved, with its sub-index rising 4.8 points to 59.1, continuing its expansion trajectory. By industry, four out of the six major sectors, including electronics and optoelectronics, food and textile, basic raw material, and transportation equipment, experienced positive trends, while the chemical and biotech, and electricity and electric equipment industries saw a decline in their indexes.
CIER economist Chen Hsin-hui echoed Lien's sentiments, stating that it remains uncertain if buyers will maintain their order placements amidst ongoing tariff concerns. Meanwhile, Academia Sinica economist Kamhon Kan expressed concerns about manufacturers' business outlooks due to anticipated reciprocal tariffs from the White House, expected to be announced on April 2.
For the March NMI, all four major factors saw increases, with sub-indexes for business activity, new orders, employment, and supplier deliveries rising by 7.1, 7.8, 2.3, and 1.2 points, respectively, reaching 52.5, 54.8, 53.2, and 54.6, all in expansion mode. However, the business outlook for the next six months in the service sector fell by 2.6 points to 48.8, signaling a cautious sentiment due to stock market volatility, geopolitical tensions, and concerns over electricity rate hikes in April.
On March 28, the Ministry of Economic Affairs announced a freeze on power rate hikes, citing economic and inflation concerns. Lien indicated that global financial markets might experience continued volatility in the coming months due to ongoing tariff issues.