The S&P Global Taiwan manufacturing PMI survey's headline index shows activity again contracted in December and at a more pronounced pace, with its headline index falling from 48.3 in November to 47.1. This survey has indicated contraction in the sector since mid-2022. Respondents, however, report modest confidence about the outlook.

Survey respondents reported more pronounced declines in output, new orders, and new export orders in December but only a marginal decline in payrolls. The survey's measure of business confidence shows that respondents expect output to increase from current levels over the next twelve months. Respondents reported weaker price pressures in December, with the survey showing a smaller increase in input costs and only a modest increase in selling prices.

The Purchasing Managers' Manufacturing Index (PMI) is based on monthly questionnaire surveys of selected companies which provide an advance indication of what is really happening in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.