Trend analysis based on the updated indicator.
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According to the latest data, Taiwan's Manufacturing Purchasing Managers' Index (PMI) reached 63.4% in the third quarter (September) of 2026, continuing its upward trend by 0.9 percentage points from the previous 62.5% (August), setting the fastest expansion record since August 2021. This marks that Taiwan's manufacturing PMI has stood firmly above the boom-or-bust line representing expansion for 12 consecutive months, indicating strong overall performance and demonstrating that Taiwan continues to benefit from the AI wave.
Breaking down the details further, industry performance showed a "rotation" trend. Although the PMI of the leading electronic and optical industry remained at a high level of 62.6%, the momentum of the new orders index cooled down significantly, falling by more than 10 percentage points in a single month. At the same time, the backlog of orders index also dropped to 54.3%, the slowest growth rate since December 2025. On the other hand, benefiting from the shift in order allocation, new orders in the chemical, biotechnology and medical, and basic raw materials industries bucked the trend and climbed to around 60.0%, timely filling the gap left by the slowdown in electronics orders.
Regarding this data performance, the Chung-Hua Institution for Economic Research (CIER) pointed out that AI-related demand remains the absolute main force driving Taiwan's manufacturing industry, but the industrial chain has gradually shifted from "simultaneous high-speed expansion of orders and production" to a new phase of "high-level expansion with slowing order momentum." Furthermore, due to escalating international geopolitical conflicts and blocked energy transportation, the raw material price index jumped sharply to 83.3%, and the supplier delivery time index also soared to 73.8%. S&P Global also warned that although there is a massive influx of orders, the mismatch of long and short materials and material shortages have led to severe delivery delays, causing severe challenges to cost pressures and production scheduling.
Looking ahead, short- and medium-term risks and catalysts across different dimensions need to be considered separately. In the short term (1-2 months), benefiting from the peak shipping season for AI servers and consumer electronics, the overall PMI is expected to maintain expansion, but close attention must be paid to the warning sign of the "customer inventory index" interrupting a three-month decline and turning back to being too high (51.0%). If end-market digestion falls short, it may trigger a short-term cooling of inventory buildup. In the medium term (3-6 months), although the six-month outlook index maintains expansion, it has fallen by 6.9 percentage points to 62.4%; the rise in oil prices and freight rates triggered by the war in the Middle East may further compress the profit margins of traditional plastics and raw material operators, and manufacturers' inventory adjustment and cost pass-through capabilities will be key.
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