Taiwan manufacturing growth accelerates in February
Business confidence at an 8-month high.
Manufacturing activity in Taiwan continued to expand in February for the eleventh consecutive month, S&P Global reported.
The S&P Taiwan Manufacturing Purchasing Managers' Index (PMI) reported a seasonal-adjusted reading of 51.5, a slightly accelerated pace than 51.1 in January.
A pivotal factor contributing to this growth was production, with survey data indicating a solid and above-average increase during the month. Gains in productivity, coupled with stronger sales, were cited as driving forces behind the rise in output.
Taiwan's manufacturing sector experienced notable growth in February, demonstrating a positive shift in factory conditions as the first quarter progressed.
Following a slight slowdown at the beginning of the year, the momentum picked up, particularly due to increased sales, which spurred both production and inventory levels. This upturn resulted in heightened optimism amongst manufacturers, with confidence reaching an eight-month high. Companies expressed a more bullish outlook, driven by favourable projections for demand, as reflected in various surveys conducted within the industry.
In terms of new orders, Taiwanese manufacturers experienced a notable uptick in demand midway through the first quarter of 2025. Overall sales growth was solid, showing slight improvement compared to the previous month, with both domestic and international client demand strengthening. Companies particularly noted Europe and the United States as key drivers of export sales. This trend of rising international demand has been consistent since June of the previous year.
In response to the growing production demands, manufacturers actively increased their purchasing of inputs and built up pre-production stock levels. February saw a marked increase in buying activity, leading to the fourth consecutive month of expansion in inventory levels. Some firms expressed a proactive approach in acquiring materials in anticipation of future sales. This build-up of inventory was further supported by improved shipping times from suppliers, with vendor performance showing positive signs for the first time since April 2024.
Despite these positive developments, manufacturers reported a slight reduction in workforce numbers, marking the sixth month in a row of workforce cuts across the industry. Some companies attributed this trend to difficulties in filling vacant positions, leading to a continued build-up of capacity pressures as backlogs of work increased for the tenth consecutive month.
Price trends also revealed a rise in input costs for firms. While inflation rates increased, they remained below the long-term average. This inflationary pressure was largely attributed to rising raw material prices. At the same time, the rate of increase for the prices charged by manufacturers saw a slowdown in February.
"Taiwan's manufacturing sector was revitalised in February, posting faster increases in key factory health barometers such as production, output, purchasing, and inventories. Taken in tandem with a pick-up in business confidence, the latest PMI survey results portray a positive near-term outlook," said Joe Hayes, Principal Economist at S&P Global Market Intelligence.
"February's growth in new factory orders also appears to reflect diverse strength across the customer base, with panellists reporting domestic and overseas markets like Europe and the US as sales drivers," he added.
Looking forward, the outlook for manufacturers in Taiwan appears optimistic, with expectations for higher production levels over the next 12 months. This sentiment represents the highest degree of optimism recorded since June of the prior year, driven largely by expectations of stronger demand and bolstering business confidence across the sector.
The combination of improved sales, inventory growth, and enhanced production capabilities positions Taiwan's manufacturing sector favourably as it moves through 2025.
