TAIPEI (Taiwan News) — Taiwan’s purchasing manager’s index showed a strong rebound to 54%, up 5.3 percentage points and reaching a nine-month high, Chung-hua Institution for Economic Research reported Wednesday.

According to the report, the seasonally adjusted new orders and production indices in the manufacturing sector rose by 4.7 and 14.9 points, per UDN. The production index climbed to 59.9%, marking the fastest expansion since June 2024.

Despite the significant rise, Academia Sinica Institute of Economics researcher Chien Chin-han (簡錦漢) believes that recent aggressive stockpiling by US firms targeting China, Canada, and Mexico might be attempts to increase inventories before tariff hikes, per CNA. Taiwanese companies may also follow suit, he said.

He added that TSMC’s additional NT$3.29 trillion (US$100 billion) investment in the US could lead to supply chain manufacturers relocating as well. Changes in production locations and increased costs could affect demand.

However, CIER Associate Research Fellow Chen Hsin-hui (陳馨蕙) believes that while the industry was somewhat cautious in Q4 last year, economic data from the US and China has improved in Q1 this year. Managers have reported stronger demand, and the inventory index has returned to expansion for the first time since September 2022, all of which send positive signals.

He said the inventory index surged to 52.7% in February, which suggests that manufacturers are receiving not just short-term rush orders but are also seeing stable demand. If end-user demand continues to recover, this could mark the beginning of a positive economic cycle.

CIER Vice President Chen Shin-horng (陳信宏) acknowledged the volatility in recent data and suggested monitoring indicators after tariff increases to better assess Taiwan’s economic situation.

Purchasing manager’s index, or PMI, is a composite indicator. It shows the prevailing economic trends in the manufacturing and service sectors.