Manufacturing sector remains weak: think tank
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.