In Taiwan, manufacturing activities rose in December to their highest level in almost three years, closing 2013 with a bang and pointing to continuing expansion in one of the electronics industry’s key production areas.
A report from HSBC and Markit today said the Manufacturing Purchasing Managers’ Index (PMI) for Taiwan surged to 55.2 in December, up from 53.4 in November, and the highest level since April 2011. All segments of the PMI rose strongly during the month led by new orders, export orders, production and purchasing, according to the research report.
Taiwan’s manufacturing strengthened during the month due to strong demand from China, Japan and the United States, according to the HSBC/Markit report. The increase in new and export orders led companies operating in the island nation to increase payroll for the seventh consecutive month and boost pre-production inventory to satisfy growing customer demand, according to economists.
“Taiwan’s manufacturing sector ends 2013 on a positive note,” said Ronald Man, an economist with HSBC. “An impressive gain in new orders and output suggest that growth will be sustained in fourth quarter 2013. Taiwan is on track for a meaningful gradual export-led recovery.”
The HSBC economist said he expects Taiwan to maintain the momentum in 2014 due to rising demand from China, which is driving the island’s recovery. However, Man said he expects “policymakers in Taipei will likely maintain an accommodative stance to support economic activity for now.”
The HSBC/Markit report for Taiwan noted that new orders grew to its highest level in 35 months in December while purchasing activity also grew sharply. The strong demand resulted in some pricing pressure during the month, the report said but noted that “firms generally chose to absorb higher cost burdens by cutting their output charges for the twenty-first month in a row during December.”