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Activity in Taiwan’s manufacturing sector grew at a softer rate in April as the rate of growth in output and new orders slowed.

The Nikkei-Markit Taiwan manufacturing purchasing managers’ index slipped to 54.4 in April from its March level of 56.2, though it remained well above the 50-point line separating expansion from contraction.

The rate of growth for new orders was the slowest in six months, but numerous companies surveyed also reported an uptick in client demand during the survey period. Growth in production also fell to a six-month low in April, the survey found.

Companies continued to add staff during April on higher workloads and recent changes to labour laws that prompted increased hiring. Input costs rose sharply during the month on higher raw material prices.

Annabel Fiddes, Economist at IHS Markit said:

Manufacturers continue to benefit from strong demand both at home and abroad which has underpinned the upturn. However, input costs continue to rise at a faster rate than output charges, to indicate a further squeeze on operating margins. Overall, the sector looks on track to support a stronger pace of economic growth this year, with IHS Markit forecasting Taiwan’s GDP to expand by 1.8% in 2017, up from 1.5% in 2016.

Taiwan forecasts 2017 growth in gross domestic product to come in at 1.92 per cent.

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