Manufacturing sector in sluggish growth for 4th straight month

Taipei, Nov. 3 (CNA) Taiwan's manufacturing sector stayed in sluggish growth mode for the fourth consecutive months with an index gauging the business climate of the sector flashing another "yellow-blue" light in September, according to the Taiwan Institute of Economic Research (TIER).

TIER, one of Taiwan's leading think tank, said the continued sluggishness of the local manufacturing sector reflected uncertainty over global trade amid lingering concerns about trade friction between the United States and China, which has prompted many Taiwanese manufacturers to hold a cautious attitude toward their business outlook.

In addition, the think tank said while the high tech industry has entered a peak season for the year, a relatively high comparison base over the same period last year affected many exports-oriented firms' sales growth in the month.

TIER cited a survey as saying that while the composite index for the sector rose 0.04 points from a month earlier to 11.53 in September, the figure remained in the yellow-blue category ranging between 10.5 and 13.

The TIER uses a five-color 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 a contraction.

Fang Chun-teh (???), a TIER economist, said despite the slight increase in the September index, the manufacturing sector had flashed a yellow-blue light for four months in a row, which has undermined many manufacturers' confidence.

He added that he was afraid the sector's performance for the fourth quarter will be impacted due to continued unfavorable factors, such as global trade issues, which have caused volatility in the financial markets.

In September, the U.S. imposed a 10 percent tariff on an additional US$200 billion worth of Chinese goods after a 25 percent tariffs on US$60 billion worth of China merchandise slapped earlier this year, and the tariff is expected to rise to 25 percent by the end of this year.

While U.S. President Donald Trump said in his Twitter post earlier this week that he had a "very good" phone conversation with Chinese President Xi Jinping (???) on many subjects with an emphasis on trade, few can be sure the trade dispute will be resolved anytime soon.

Out of the five factors of the composite index, three of the sub-indexes moved lower with the sub-indexes on pricing, general business climate and demand down 0.15, 0.08 and 0.04 points, respectively, from a month earlier in September, TIER said.

However, the sub-indexes on purchases of raw materials and operating costs moved higher by 0.26 and 0.06 points, respectively, in September, TIER added.

The textile industry flashed a yellow-blue light in September, a downgrade from a green light as many buyers' sentiment was hurt by rising product prices, TIER said, adding that escalating competition from China also impacted the industry.

TIER said the chemical industry felt the pinch from global trade issues and continued to flash a yellow-blue light in September, while the auto and auto parts industry witnessed rising competition from imported car models, and continued to flash a blue light.

The think tank said the electronics component industry flashed a yellow-blue light in September, unchanged from August, as demand for mobile devices slowed and a high comparison base over the same period of last year affected their sales growth.

Source: Focus Taiwan News Channel