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An upswing in Taiwan’s manufacturing sector appears to have returned based on the latest reading from a closely-watched gauge.

The Nikkei-Markit Taiwan manufacturing purchasing managers’ index came in at 56.2 in March, up 1.7 points after dipping in February and pushing higher above the 50-point mark that delineates expansion from contraction.

Sub-indices tracking output, new orders and employment all rose at a faster pace last month, as new export orders rose at the quickest clip since August 2014. Companies surveyed attributed the boost in external demand to clients in China, Europe and the US.

That helped boost business confidence to the highest level in 26 months, with about 41 per cent of manufacturers expecting output to rise over the next 12 months.

Firms also raised prices charged to clients as input costs rose due to continued growth in raw materials prices – though not at the same rate.

Economist Annabel Fiddes at Markit, which compiles the survey, cautioned that “Sustained cost pressures and squeezed margins remain key areas of concern, however, as input prices continue to rise at a much sharper pace that output charges.”

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