Taiwan Manufacturing Downturn Moderates

The S&P Global Taiwan Manufacturing PMI fell to 53.3 in March 2026 from 55.2 in February, signaling a slower yet still solid improvement in the sector. Output and new orders rose at softer rates, though both remained above long-term averages, supported by strong domestic and overseas demand, particularly for semiconductors and AI-related products. New export business also expanded at a solid pace. Purchasing activity increased for the fourth month, while stocks of purchases rose modestly. Meanwhile, rising input costs from higher raw material and energy prices amid the war in the Middle East drove the sharpest increase in output charges since June 2022. Supplier performance deteriorated at the fastest pace since May 2022, while employment fell marginally for the first time in three months. Despite these pressures, manufacturers remained optimistic, with sentiment near February’s 21-month high, reflecting expectations of continued strong global demand over the next year.

The S&P Global Taiwan Manufacturing PMI rose to 55.2 in February 2026 from 51.7 in January. This was the third consecutive month of growth and the most pronounced since December 2021. Robust global demand drove the sharpest increases in output and new orders in over four-and-a-half years, prompting firms to boost both purchasing activity and inventory levels at faster rates. Employment also grew modestly, representing the strongest increase in staff numbers in nearly three-and-a-half years. However, backlogs accumulated at the quickest pace since August 2021. On the price front, input costs rose at the sharpest pace since April 2022, linked to higher prices for raw materials, while output charge inflation accelerated to its highest since mid-2022. Lastly, business confidence strengthened to a 21-month high amid hopes that global demand conditions will continue to improve in the coming months.

The S&P Global Taiwan Manufacturing PMI rose to 51.7 in January 2026 from 50.9 in December, marking a second consecutive monthly improvement in manufacturing activity and the highest level since December 2024. Total new business expanded at its fastest pace in 11 months, supported by stronger customer demand both domestically and overseas. New export orders also rose at the start of 2026 amid robust demand from Europe, Mainland China, the US and Japan. In response to higher backlogs, firms sought to expand operational capacity by raising staffing levels for the second time in the past three months. Inflationary pressures intensified, with both input costs and selling prices rising at the fastest rates since mid-2022. Despite hopes for continued demand, firms expect conditions to weaken over the next 12 months.