The S&P Global Taiwan Manufacturing Purchasing Managers’ Index (PMI) improved to 53.2 in June from 50.9 last month. As a result, the index moved further above the 50.0 no-change threshold, and signaled a faster improvement in manufacturing-sector operating conditions compared to the previous month.

The increase in the PMI for June was primarily driven by faster gains in output and new orders, alongside a firmer rise in purchasing activity. Notably, production saw its greatest increase since July 2021, supported by the strongest rise in new orders in nearly three years. This was attributed to a widespread improvement in demand for goods, with sales rising from both domestic and international sources, including Europe, Southeast Asia, and the United States. Despite higher output, employment levels remained broadly steady due to a focus on productivity improvements.

Inflationary pressures intensified in June, with input prices rising at the sharpest rate in two years, reflecting a significant mismatch between product supply and demand. Despite attempts to pass these higher costs onto clients, resulting in a rise in output charges for a second consecutive month, the rate of charge inflation lagged behind that of input prices. Finally, business confidence dropped to a four-month low, as firms remained concerned about market competition and the impact of high inflation on growth prospects.