Taiwan’s January PMI declined to 48.7 (prior: 50.8), ending two consecutive months of expansion, according to National Development Council of Taiwan on February 10.
From the sub-index perspective, new orders and production both fell back into contraction territory at 49.7 (prior: 50.9) and 45.0 (prior: 52.1), respectively, reflecting the dissipation of the Lunar New Year pre-holiday stockpiling effect and reduced working hours during the holiday, leading to a seasonal slowdown.
The employment index edged down slightly to 50.8 (prior: 51.5) but remained in expansion for the ninth consecutive month. Inventories continued to contract for the 23rd consecutive month, standing at 46.5 (prior: 47.4), indicating that overall inventory levels remain well-managed.
Customer inventories also remained in contraction at 45.3 (prior: 44.5), while the new orders minus customer inventories spread only slightly declined to 4.4 (prior: 6.3). Additionally, supplier deliveries expanded for the second consecutive month at 51.7 (prior: 52.5), highlighting the resilience in manufacturing demand.
From an industry perspective, the electronics and optics sector returned to contraction at 46.4 (prior: 51.6), affected by the seasonal slowdown in consumer electronics demand. The basic raw materials sector (cement, steel) also contracted at 46.6 (prior: 49.3) due to the continued impact of Taiwan’s real estate tightening policies and weakening demand from China and Southeast Asia. However, the food and textile sectors further increased to 54.3 (prior: 52.5), expanding for the fourth consecutive month, reflecting strong domestic consumer demand.
Notably, the six-month manufacturing outlook returned to expansion, ending four consecutive months of contraction, with only the power and machinery sector remaining in contraction. However, this survey was conducted before U.S. President Trump’s tariff announcement, and respondents were more focused on China’s trade-in policy and U.S. infrastructure-related demand. Whether optimism can be sustained will depend on the progress of tariff policy implementation.
Overall, Taiwan’s January PMI decline was primarily due to short-term disruptions, including the dissipation of pre-Lunar New Year stockpiling and reduced working days during the holiday. Nevertheless, strong AI-driven demand and increasing capital expenditures by major tech firms have led to renewed optimism in the electronics and optics sector.
Meanwhile, domestic demand-driven industries, such as food and textiles, continue to show stable growth momentum, indicating resilience in both domestic and international demand. If U.S. tariff policies and the global economic environment become clearer, Taiwan’s manufacturing sector is expected to continue recovering, gradually narrowing disparities across industries.
