Manufacturing sector picks up in December: think tank

Taipei, Feb. 5 (CNA) The local manufacturing sector showed sluggish growth in December 2019, with the index gauging the sector’s climate rising from a month earlier as trade talks between the United States and China moved in a positive direction, along with a booming equity market, according to data released Wednesday by the Taiwan Institute of Economic Research (TIER).

The TIER data showed that the composite index for the manufacturing sector in December flashed a yellow blue light signaling sluggish growth, after flashing a blue light indicating contraction for 13 consecutive months since November 2018.

In December, the manufacturing sector index rose to its highest level of 11.15 points for 2019, up 0.93 points from the revised 10.22 points in November, and flashed the first yellow blue light for last year.

A yellow blue light signals a range of between 10.5 and 13 points, while a blue light indicates a level below 10.5 points.

TIER, one of Taiwan’s leading think tanks, 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 contraction.

The manufacturing sector composite indicator for 2019 was weaker than 2018, mainly because Taiwan’s exports began to slow down in the second half of 2018 and moved down in the first three quarter of 2019 before showing an upward trend in the fourth quarter due to sluggish global demand and the impact of U.S. China trade friction, according to TIER.

However, thanks to good performance of the Taiwan stock market in December and a pickup in confidence in the local economy as trade tension between the world’s two largest economies eased, the index for the manufacturing sector for the month showed signs of recovery, according to TIER.

In addition, with an annual global oil price increase, continuing adjustment of industrial supply chains and strong demand for high end semiconductor products, the December manufacturing composite index was higher than in the previous month.

Looking ahead, TIER forecast that the sector will see a mild recovery in 2020, while the composite index for the sector for the whole of this year is expected to flash a yellow blue light.

Other factors, such as increased investment by the semiconductor industry in advanced processes, the launch of 5G infrastructure projects and the return of China based Taiwanese manufacturers to invest at home are expected to contribute to the improvement in the manufacturing sector, TIER said.

Source: Focus Taiwan News Channel