Taiwan’s Manufacturing Sector Bounces Back Amid Trump-Related Concerns.

Taipei: Manufacturing activity in Taiwan showed signs of recovery in November, as export-driven manufacturers experienced a surge in orders from overseas clients ahead of the impending inauguration of U.S. President-elect Donald Trump. This development comes amid concerns over potential tariffs Trump could impose on countries with substantial trade surpluses with the United States, according to the Chung-Hua Institution for Economic Research (CIER). According to Focus Taiwan, CIER's data revealed that the November purchasing managers' index (PMI), which assesses the health of the manufacturing sector, increased by 1.4 points from the previous month, reaching 51.4. This marks a return to expansion territory for the sector. Similarly, the nonmanufacturing index (NMI) rose by 0.8 points to 54.6, continuing a 25-month streak of expansion. The PMI and NMI indices provide a measure of sectoral growth, with readings above 50 indicating expansion and those below 50 reflecting contraction. In November, three of the five key components of the PMI-new orders, production, and inventories-showed improvements, with increases of 3.6, 4.0, and 1.4 points, respectively, although inventories remained in contraction at 48.6. CIER attributed the uptick in orders to the so-called "Trump effect," which boosted demand for Taiwanese electronics and optoelectronics. Despite this growth, employment and supplier deliveries indices fell by 1.4 and 0.5 points, respectively, with supplier deliveries remaining in contraction at 48.3. During a news conference, CIER President Lien Hsien-ming noted that the growth in November's PMI was modest. "While the optoelectronics and information communications technology sectors experienced a positive influx of new orders, manufacturers are cautious about their six-month outlook," Lien remarked. The business outlook index, reflecting future expectations, decreased by 0.4 points to 47.9, indicating contraction. Lien further explained that the lingering uncertainty following the U.S. presidential electi on has led manufacturers to adopt a cautious stance, closely monitoring Trump's proposed policies. CIER economist Chen Hsin-hui echoed these sentiments, suggesting that the increase in orders may be short-term rather than indicative of lasting growth. CIER's analysis by industry revealed mixed results. The chemical and biotech, electronics and optoelectronics, and basic raw materials sectors showed improvement, with the former two returning to expansion. However, industries such as food and textile, transportation equipment, and electricity and electric equipment saw declines, with only the latter maintaining expansion. In the service sector, the NMI's four main components-business activity, new orders, employment, and supplier deliveries-remained in expansion, despite slight declines in employment and supplier deliveries indices. The business outlook for the service sector continued its 13-month expansion streak, albeit with a minor decrease to 50.6. CIER noted that end-of-year peak season dynamics suppor ted the service sector, although a cooling housing market and stock market downturn pushed property market activity into contraction.