Taipei: Riding the wave of global AI development, Taiwan's manufacturing activity expanded at the fastest pace in five years, marking its 11th consecutive month in expansion, as reported by the Chung-Hua Institution for Economic Research (CIER).
According to Focus Taiwan, CIER revealed that the August purchasing managers' index (PMI) in the manufacturing sector rose to 62.5, an increase of 1.0 from the previous month, reaching its highest level since July 2021. This growth reflects robust global demand for advanced technology products including AI servers, high-end memory chips, and high-speed optical communications devices.
Despite the manufacturing sector's expansion, the non-manufacturing index (NMI) in the service sector fell by 1.7 to 55.6 in August, yet it still indicated expansion. PMI and NMI readings above 50 signify expansion, whereas those below 50 denote contraction.
The August PMI saw increases in subindexes for new orders, production, and employment, which rose by 3.2, 2.5, and 3.0 respectively, indicating strong performance in these areas. Conversely, subindexes for supplier deliveries and inventories decreased, though they remained in expansion mode.
CIER highlighted a slowdown in inventory expansion for the third consecutive month, attributed to raw material shortages, which led to slower distribution and longer delivery times. Increasing prices for key raw materials also impacted inventory levels.
CIER President Lien Hsien-ming noted that Taiwan's robust export performance in the AI sector is evident from the improved August PMI, although tight supply chains and higher raw material prices pose challenges. The rise in mature memory chip prices has led to increased costs for consumer electronics, raising concerns about potential impacts on consumer demand.
In August, four of the six major industries within the PMI - chemical and biotech, electronics and optoelectronics, basic raw materials, and electricity and machinery equipment - showed improvement. However, the transportation equipment and food and textile industries experienced weaker manufacturing activity, though they still remained in expansion mode.
Lien commented that although the NMI indicated a slowdown in service sector growth due to stock market volatility, its continued expansion reflects the overall soundness of the local economy.