Taiwan manufacturing PMI eases to 54.7 in August

Rising AI demand and persistent supply chain bottlenecks left factories juggling.

Taiwanese manufacturers reported another strong performance in August, with production and sales expanding sharply, according to the latest S&P Global Purchasing Managers’ Index survey data, though its overall rate of expansion moderated slightly compared with July.

The seasonally adjusted headline Purchasing Managers’ Index registered 54.7 in August, slipping from 55.1 in July. Whilst this represented a five-month low, the reading remained well above the historical average, signalling a robust monthly improvement across the sector.

Output continued to rise steeply, underpinned by further strong inflows of new business. Notably, new export orders grew at an accelerated pace—amongst the fastest seen in over four and a half years—with manufacturers pointing to stronger demand from key export destinations including Europe, the US, mainland China, Japan, India, and South-East Asia.

Despite sustained order growth, staffing levels rose only marginally. Whilst several businesses recruited additional workers to expand operational capacity, others adopted a cautious hiring approach, often opting not to fill vacancies or replace departing employees. Consequently, backlogs of work accumulated at one of the sharpest rates recorded over the past five years.

Buying activity rose at a rapid pace to support production schedules, but supply chain pressures intensified. Delivery times lengthened considerably, largely driven by product shortages linked to surging global demand for AI-related technology.

Higher raw material costs, combined with supply chain disruptions connected to the conflict in the Middle East and AI-driven demand, caused input price inflation to accelerate for the first time in four months. Average prices charged by Taiwanese manufacturers also rose significantly, albeit at a slightly slower pace than in July.

Looking ahead, business confidence rebounded from July’s three-month low. Taiwanese manufacturers expressed optimism regarding the 12-month outlook for production, citing expectations of sustained market demand and prospective sales enquiries.