Taiwan's manufacturing sector remained in a rapid growth phase in July but the index gauging the sector's climate fell from June as the Delta variant of COVID-19 escalated worldwide, the Taiwan Institute of Economic Research (TIER) said Tuesday.
Data compiled by the TIER, one of the leading think tanks in Taiwan, showed the composite index for the local manufacturing sector moving lower in July by 1.16 points from June to 16.52, which remained in the "yellow-red" light range between 16 and 18.5.
It was the third consecutive month the local manufacturing sector flashed a yellow-red light after flashing a red light in April. According to the TIER, the sector flashed a yellow-red light in January, a green light in February, and another yellow-red light in March.
The TIER uses a five-color coded 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.
Taiwan's export-oriented manufacturers benefited from solid global demand in July. Tech exporters saw shipments boosted by emerging technologies and a booming stay-at-home economy, while old economy vendors were helped by a recovery in demand.
The July index was compromised, however, by fears over the spreading of the Delta variant in Southeast Asian, the United States and Europe, which has affected the economic recovery and demand in some countries.
The silver lining was that many major economies are launching infrastructure projects to lend support to their economies and keep demand from weakening too much, the TIER said.
Among the five factors in the composite index for July, only the sub-index on pricing moved higher, by 0.18 from a month earlier.
The four other sub-indexes for the general business climate, demand, purchases of raw material, and costs moved lower by 0.62, 0.58, 0.17 and 0.03, respectively, from June, the think tank said.
A TIER survey found that 45.74 percent of polled manufacturers thought their businesses flashed a yellow-red light in July, up from 36.72 percent in a similar survey in June, while 17.09 percent of them said their businesses flashed a red light, down from 43.57 percent a month earlier.
Another 25.69 percent of respondents said their businesses flashed a green light in July, up from 14.30 percent in June, and 7.99 percent said their businesses flashed a yellow-blue light in July, up from 4.45 percent in June, TIER said.
Some 3.50 percent of respondents said their businesses flashed a blue light in July, up from 0.95 percent in June, according to the TIER.
In terms of individual industries, the TIER said the electronics component industry flashed a green light in July, retreating from a red light in June, as the spread of the Delta variant in Southeast Asia and the U.S. affected the global supply chain.
The base metal industry continued to flash a red light in July as large infrastructure projects in the U.S. and Europe sent demand for steel higher, while the transportation industry flashed a green light, after a yellow-blue light in June, on strong demand for electric vehicle components and bicycles from the West, TIER added.
Source: Focus Taiwan News Channel