Taiwan's manufacturing sector grew sluggishly in June amid slowing global economic growth and rising inflation, according to the Taiwan Institute of Economic Research (TIER).
TIER's composite index for the local manufacturing sector fell by 0.53 points from a month earlier to 11.81 in June, flashing a "yellow-blue," which indicates sluggish growth under the think tank's five-tier system, with "red" indicating overheating, "yellow-red" fast growth, "green" stable growth, "yellow-blue" sluggish growth, and "blue" contraction.
It was the fourth consecutive month the index for the local manufacturing sector sat in the yellow-blue range between 10.5 and 13 points, with TIER attributing this to clients of local manufacturers entering inventory adjustments due to weakening demand.
In June, three of the five factors in the composite index moved lower from a month earlier, with the subindexes on demand, the purchase of raw materials, and pricing down 0.31, 0.25, and 0.12, respectively, TIER said.
Conversely, the subindexes on the general business climate and costs moved higher by 0.11 and 0.04, respectively.
TIER said the electronic components sector continued to sit in the green range in June, as the semiconductor industry faced inventory adjustments due to weakening demand for consumer electronics.
TIER said electronics component manufacturers had begun to explore ways to diversify their product portfolios to secure more orders.
TIER said geopolitical tensions, rising inflation and a rate hike cycle had made the steel market cautious about demand.
This had pushed down export orders and production for many steel suppliers, resulting in the base metals sector sitting in the blue range in June, compared with a yellow-blue in May.
According to a survey of businesses conducted by TIER for June, 29.55 percent of the respondents thought their business sat in the blue range, up from 20.53 percent in May, while 40.87 percent said their business sat in the yellow-blue, down from 46.43 percent a month earlier.
Meanwhile, 29.58 percent of the respondents thought their business sat in the green range in June, up from 26.51 percent in May, while 0 percent said their business sat in the yellow-red or red range.
Looking ahead, TIER said the global economy still faced risks due to record high energy and grain prices, adding that it remained to be seen when global supply chains would return to normal.
In addition, TIER said that the world's major central banks were expected to continue tightening monetary policy to fight inflation, which is expected to send ripples through the global financial markets.
Source: Focus Taiwan News Channel