Taiwan's April factory output accelerates amidst panic buying frenzy
Input costs climb at near-record pace as manufacturers scramble to stockpile amid deepening disruptions
Taiwan's manufacturing sector accelerated sharply at the start of the second quarter, with production and new orders both growing at their fastest rates in years — though analysts warned that much of the apparent strength was driven by panic buying and stockpiling rather than underlying demand, as the war in the Middle East inflicted the most severe disruption to supply chains since the Covid-19 pandemic.
The S&P Global Taiwan Manufacturing Purchasing Managers' Index rose to 55.3 in April from 53.3 in March, the highest reading since December 2021 and the fifth consecutive month above the 50-point threshold separating growth from contraction. The jump was amongst the sharpest improvements in business conditions recorded in recent years.
Output grew at the second-quickest pace since June 2024, with manufacturers citing not only rising order books but a deliberate effort to build inventories ahead of anticipated price rises and shortages linked to the Middle East conflict. New orders expanded at the second-fastest rate since July 2021, driven in part by customers stockpiling for the same reasons. Export orders also rose sharply, with firms reporting stronger intake from the United States, Europe, mainland China, Japan and South-East Asia.
The headline figures, however, concealed mounting strain beneath the surface. Supplier delivery times lengthened at the most pronounced rate in just over four years — the steepest deterioration since the height of the pandemic supply crunch — as the war disrupted shipping lanes and drove up demand for inputs simultaneously. Strained supply chains hampered firms' own stock-building efforts, with inventories of purchased materials growing at only a modest pace. Stocks of finished goods fell marginally as producers drew on existing holdings to fulfil orders.
The cost pressure was severe. Input prices rose at their sharpest pace in nearly five years in April, placing the reading amongst the fastest on record in the survey's 22-year history. Rising oil prices were identified as a key driver, compounded by widespread supplier price hikes. Firms passed much of the burden on to customers: selling prices rose at the steepest rate since late 2021.
Despite the production surge, manufacturers reduced headcount for the month, albeit marginally, largely through not replacing staff who left voluntarily. The combination of fewer workers and a heavier workload pushed backlogs of unfinished business to the second-highest rate of accumulation since October 2021.
Business confidence, whilst remaining broadly positive, weakened to a three-month low. Many firms expressed optimism about sustained demand growth — particularly in artificial intelligence-related sectors — but an increasing number adopted a more cautious outlook in light of the worsening geopolitical situation.
Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said the data showed how comprehensively the Middle East war had reshaped conditions for Taiwanese manufacturers. "The war contributed to the greatest disruption to supply chains since the Covid-19 pandemic and a substantial rise in input costs at the start of Q2," she said, adding that expenses had risen at one of the fastest rates since the survey began. "The war in the Middle East continues to cloud the outlook."
The S&P Global Taiwan Manufacturing PMI is compiled from monthly surveys of around 300 purchasing managers and is widely used by central banks and financial markets as an early indicator of economic trends.
