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Taiwanese manufacturing softened to a four-month low in February as companies highlighted slower increases in output and new orders.

The Nikkei-Markit purchasing managers’ index for manufacturing in Taiwan edged down to 54.5 in February, from 55.6 in January. The gauge remained above the 50-point mark separating expansion and contraction for the ninth consecutive month.

February saw a sharp increase in purchasing activity, although this measure was at its weakest level since October, as companies managed higher production requirements. Greater demand for inputs pushed up delivery times amid stock shortages at vendors.

Increased input buying was reported in February as some companies surveyed said they had increased inventories to guard against price rises and stock shortages, with many commenting on higher costs for raw materials.

Annabel Fiddes, economist at IHS Markit said:

Encouragingly, the data indicated that the current upturn in demand remains broad-based across both domestic and international markets, while a further steep increase in purchasing activity raises the prospect of continued production growth in coming months. IHS Markit forecast that Taiwan’s GDP will expand by approximately 1.7% in 2017, up from 1.4% in 2016.

Taiwan’s GDP for the three months to December expanded 2.88 per cent amid growing demand for electronics.

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