Weak manufacturing fails to pick up in June: report
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.
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.