Taiwan manufacturing index nears 5 year high in April

台灣製造業指數在4月接近5年來新高

TAIPEI (Taiwan News) — Taiwan’s manufacturing sector expanded at a faster pace in April, with the purchasing managers’ index rising to its highest level in nearly five years, according to the Chung-Hua Institution for Economic Research, per CNA.

CIER said the April PMI increased by 4.9 percentage points to 60.3%, marking the seventh consecutive month of expansion and the fastest growth since September 2021.

CIER President Lien Hsien-ming (連賢明) attributed the rise to three main factors: manufacturers advancing shipments due to tensions linked to the US-Iran situation, Taiwan’s strong export performance in the first quarter, and robust growth in the electronics sector, which has helped drive other industries.

PMI uses 50% as the threshold between expansion and contraction. A reading above 50% indicates expansion, while a reading below 50% signals contraction.

Lien noted that Taiwan’s exports remained strong in the first quarter, with March exports reaching US$80 billion, led by the electronics industry, which also supported growth in other sectors, according to CNA.

Chen Hsin-hu (陳馨蕙), an associate researcher at CIER, said the suspension of petrochemical supply and higher price quotations in March prompted manufacturers to build up inventories earlier than planned. Combined with AI demand from November, shortages and rising prices are affecting the semiconductor supply chain and electronic components, per CNA.

Chen added that reports of a strike by workers at major Korean memory chip manufacturers in April further pushed up the supplier delivery time index, which rose 4.3 percentage points to 70.6%, the fastest increase since July 2021.

Looking ahead, Chen said the manufacturing sector is expected to continue expanding over the next six months, though performance will vary across industries. He noted that transportation equipment, chemical and biotechnology/medical, as well as food and textile sectors, are experiencing declining returns.

Chien Chin-han (簡錦漢), a researcher at the Institute of Economics, Academia Sinica, said current global economic growth is largely driven by AI-related investment but warned that such growth is concentrated in a narrow segment of the economy, posing potential risks.

He also cautioned that ongoing tensions in the Middle East, including the closure of the Strait of Hormuz, could sustain energy price pressures in Southeast Asia and Europe, underscoring the need for close monitoring of geopolitical developments.

Meanwhile, the non-manufacturing index also showed expansion. Academia Sinica said the unadjusted NMI rose 4 percentage points to 58.3% in April, supported by a stock market rally, strong demand from high-end manufacturing clients, the Mother’s Day holiday, and seasonal peaks in some industries.

The outlook for the next six months remains positive, with the NMI outlook index increasing 4.3 percentage points to 56.7%, indicating continued expansion.