Weak man­u­fac­tur­ing fails to pick up in June: re­port

The China Post - - TAIWAN BUSINESS - BY JOHN LIU

Fall­ing oil prices and de­layed busi­ness con­sump­tion have taken a toll on the man­u­fac­tur­ing sec­tor, the eco­nomic in­di­ca­tor of which flashed a de­pressed “blue” sig­nal in June, ac­cord­ing to a re­port re­leased yesterday by the Tai­wan In­sti­tute of Eco­nomic Re­search ( TIER, ).

The “blue” sig­nal in June was the third in a row, and con­trib­uted to a de­pressed econ­omy in the sec­ond quar­ter over­all.

The na­tion’s ex­ports, pro­duc­tion in­dex and for­eign or­ders con­tin­ued to un­der­per­form, and TIER pre­dicted a slug­gish “yel­low- blue” sig­nal for the whole year.

Oil prices started to see a sub­stan­tial de­cline in the sec­ond half of 2014, caus­ing stag­nant growth in var­i­ous sec­tors while de­lay­ing pur­chase ac­tiv­i­ties from com­pa­nies that be­lieve prices will go fur­ther down, TIER said.

In con­trast to an ear­lier forecast, con­sumers world­wide did not in­crease spend­ing in the wake of fall­ing oil prices. As a re­sult, eco­nomic re­cov­ery mo­men­tum has slowed down glob­ally.

Although the eco­nomic in­di­ca­tor main­tained a “blue” sig­nal in June, the econ­omy ac­tu­ally im­proved from the pre­vi­ous month. The eco­nomic mon­i­tor­ing score grew 0.25 points to 9.42, up from 9.17 in May.

Slug­gish Per­for­mance

Across In­dus­tries

The TIER re­port forecast that the con­sumer goods sec­tor will flash a slug­gish “yel­low- blue” sig­nal for the cur­rent year over­all.

While the U. S. and Euro­pean economies have grad­u­ally re­cov­ered, driv­ing con­sumer de­mand for cloth­ing prod­ucts, textile ex­ports have dropped be­cause of in­tense com­pe­ti­tion and fall­ing ma­te­rial prices. Ex­ports and for­eign or­ders in the in­dus­try fell in the first six months of 2015, com­pared with the same pe­riod last year.

The chem­i­cal and rub­ber sec­tor will ex­pe­ri­ence an over­all de­pressed “blue” econ­omy in 2015. Ex­ports of petro­chem­i­cal and min­eral prod­ucts saw neg­a­tive growth so far this year on the back of crude oil’s over­sup­ply and low price. The ex­tent of the crude’s de­cline may mod­er­ate in the fourth quar­ter, TIER re­ported.

The me­tal and ma­chin­ery sec­tor is also pro­jected to see a slug­gish “yel­low- blue” state, largely be­cause of weak global de­mand and in­tense com­pe­ti­tion in the in­dus­try.

The elec­tron­ics and elec­tri­cal en­gi­neer­ing sec­tor was also forecast to flash a “yel­low- blue” sig­nal. While a new iPhone may give lo­cal firms a spike in sales, the semi­con­duc­tor in­dus­try’s in­ven­tory ad­just­ment along with weak­en­ing PC de­mand are ex­pected to abate the growth mo­men­tum.

The trans­porta­tion sec­tor will have the same “yel­low- blue” state, TIER said. Although car sales have been sta­ble, shrink­ing de­mand from over­seas and last year’s high bench­mark may com­pro­mise this year’s growth num­ber, in­sti­tute said.

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