Manufacturing activity expands for 3rd straight month

Taipei, Jan. 2 (CNA) Taiwan's manufacturing activity expanded for the third consecutive month in December as strong global demand for artificial intelligence applications continued to bolster the export-oriented manufacturing sector, Chung-Hua Institution for Economic Research (CIER) said on Friday.

Data released by CIER, one of the leading economic think tanks in Taiwan, showed the purchasing managers' index (PMI), which gauges fundamentals in the manufacturing sector, rising 3.9 from a month earlier to 55.3 in December, the highest level in about 18 months.

In the service sector, the non-manufacturing index (NMI) fell 1.2 from a month earlier to 54.6 in November, but it remained in expansion mode for the 10th consecutive month, the data indicated.

PMI and NMI readings above 50 indicate expansion, while those below 50 show contraction.

In December, the five major factors that make up the PMI all moved higher with the subindexes on new orders and production rising 6.7 percent and 7.7 percent, respectively, from a month earlier to 57.6 and 58.6. CIER said the fast growth of the two factors provided a key boost to the higher PMI.

The subindexes on supplier deliveries and inventories also moved higher by 3.2 and 3.6, respectively, from a month earlier to 57.6 and 52.2 in November, while the subindex on employment fell 1.7 to 50.5.

In addition, the subindex on business outlook over the next six months rose 5.6 from a month earlier to 51.0, marking the first expansion reading since the United States introduced its tariff polices in April, CIER said.

Among the major industries, the electronics and optoelectronics industry benefited from AI business opportunities, posting 59.5 on the PMI in December, sharply up from 52.2 in November.

CIER Associate Research Fellow Chen Hsin-hui (陳馨蕙) told reporters that Nvidia Corp. is not the only company dominating AI development, with Google also emerging as a major player in the current AI era. Chen said Taiwan is riding the waves of dual AI growth engines.

CIER President Lien Hsien-ming (連賢明) said Taiwan is the major supplier of AI devices, with an 80-90 percent global market share, so the technology is expected to continue to drive Taiwan's PMI higher in the future.

In December, the subindexes on the NMI's business activity and new orders moved lower by 3.8 and 4.2, respectively, from a month earlier to 53.8 and 56.0, while the subindexes on employment and supplier deliveries rose 1.9 and 1.4, respectively, to 54.0 and 54.6. The four major factors all stayed in expansion mode.

Commenting on the decline in the December NMI, Lien said the fluctuation was minor, with the service sector still upbeat about its activity.