Taipei-The local manufacturing sector showed signs of improvement in November, with the index gauging the sector’s climate rising from a month earlier as trade tensions eased between the United States and China, according to the Taiwan Institute of Economic Research (TIER).
Tuesday-released TIER data showed the composite index for the manufacturing sector rising 0.94 points in November from a month earlier to 10.68.
The index flashed a “yellow-blue” light, which signals a range of between 10.5 and 13 points, while a blue light indicates a level below 10.5 points.
TIER, one of the leading think tanks in Taiwan, 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.
In November, the manufacturing sector index rose to the highest level for 2019, after flashing a blue light for 12 consecutive months, indicating recovery, which is likely to continue, TIER said.
The sector was boosted by manufacturers’ optimism toward global trade, as China and the U.S. moved closer to a phase-one deal to resolve their trade disputes, TIER said.
On the other hand, the Washington-Beijing trade war prompted many Taiwanese manufacturers in China to invest at home to avoid U.S. tariffs on Chinese goods, TIER said.
Other factors that contributed to the improvement in the manufacturing sector were a booming local equity market and increased investment by the semiconductor industry to upgrade its technology to meet rising global demand, TIER said.
The benchmark weighted index on the Taiwan Stock Exchange rose 1.15 percent in November and continued its upswing in December.
Of the five factors in the manufacturing composite index, three moved higher, one fell, and one remained unchanged.
The sub-indexes for the general business climate, purchases of raw materials, and demand rose 0.51 and 0.29 and 0.24 in November, respectively, from a month earlier, the TIER data showed.
The sub-index for pricing fell 0.11, while that for costs remained flat, according to the data.
Meanwhile, 49.45 percent of manufacturers in TIER’s monthly survey said their businesses flashed a blue light in November, down from 50.96 percent in a similar poll in October, while 23.34 percent said they flashed a yellow-blue light, compared with 44.35 percent the previous month.
Some 25.73 percent of businesses flashed a green light in November, up from 4.69 percent in October, while 1.47 percent flashed a yellow-red light in November, compared with zero percent a month earlier, the survey showed.
The survey also found none of the businesses flashed a red light in November.
TIER said the local electronics component industry flashed a green light in November for the first time in 2019, improving from a yellow-blue light in October, as inventories dropped among its clients in the peak season.
The automobile and auto parts industry flashed a green light in November, compared with a yellow-blue light in October as car sales rose 13.02 percent in November from a year earlier.
The improvement was also driven by demand from American and European buyers for Taiwan-made auto components, TIER said.
However, the base metal industry continued to flash a blue light in November due to falling product prices as China, India and Vietnam cut their steel export prices, TIER said.
Source: Focus Taiwan News Channel