Man­u­fac­tur­ing sec­tor re­mains weak: think tank

The China Post - - TAIWAN BUSINESS -

Tai­wan’s slump­ing ex­ports con­tin­ued to drag down the coun­try’s man­u­fac­tur­ing sec­tor in July, with the sec­tor flash­ing another “blue” light dur­ing the month, the Tai­wan In­sti­tute of Eco­nomic Re­search (TIER, ) said Fri­day.

In a monthly re­port, the eco­nomic think tank said that while the man­u­fac­tur­ing com­pos­ite in­dex for July rose 0.22 points from a month ear­lier to 9.33, it re­mained firmly “blue,” sig­nal­ing eco­nomic con­trac­tion, be­cause the read­ing was still be­low 10.5.

It was the fourth con­sec­u­tive month for the man­u­fac­tur­ing com­pos­ite in­dex to flash a blue light, the TIER data showed.

The in­sti­tute uses a five-light sys­tem to de­scribe eco­nomic ac­tiv­ity, with red in­di­cat­ing over­heat­ing, yel­low-red show­ing fast growth, green rep­re­sent­ing sta­ble growth, yel­low-blue sig­nal­ing slug­gish growth and blue re­flect­ing neg­a­tive growth.

The latest man­u­fac­tur­ing com­pos­ite in­dex was re­leased by the TIER af­ter Tai­wan re­ported a year-on-year fall in ex­ports for the sixth con­sec­u­tive month in July. In the first seven months of this year, Tai­wan’s ex­ports fell 7.1 per­cent from a year ear­lier.

TIER said that three of the five fac­tors of the in­dex trended higher in July than June: the sub-in­dex for de­mand rose 0.14 points, the largest gain among the three; the sub-in­dex for busi­ness en­vi­ron­ment gained 0.07 points; and the sub-in­dex for raw ma­te­rial pur­chases added 0.03 points.

How­ever, the sub- in­dex for op­er­at­ing costs fell 0.03 points from a month ear­lier, and the subindex for prod­uct prices stayed un­changed, the think tank said.

In July, in­ter­na­tional crude oil prices con­tin­ued to fall with Brent down 10.1 per­cent from a month ear­lier. The weak­ness of the world’s oil mar­ket hurt the lo­cal petro­chem­i­cal in­dus­try, lead­ing the sec­tor to flash a blue light, the in­sti­tute said.

Do­mes­tic ma­chin­ery ex­porters also saw their or­ders fall be­cause of de­clin­ing global de­mand for steel, lead­ing the me­tal and ma­chin­ery seg­ment to also flash a blue light in July, TIER said.

A blue light also flashed for the lo­cal com­puter/elec­tron­ics/op­to­elec­tron­ics seg­ment in July on the back of slow­ing de­mand for smart­phones from China and no signs of an im­me­di­ate turn­around in the global PC busi­ness, the think tank said.

Both the semi­con­duc­tor and the auto and auto com­po­nent sec­tor sub-in­dexes also flashed blue lights in July.

The semi­con­duc­tor sec­tor suf­fered from in­ven­tory ad­just­ments, while the auto sec­tor was hurt by a 6.6 per­cent year-on-year de­cline in car sales dur­ing the month.

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