Taiwan’s manufacturing sector flashes ‘yellow-blue’ light

Taipei--The local manufacturing sector flashed a "yellow-blue" light in January for the fourth consecutive month as the index that gauges the climate of the sector dropped from the previous month, the Taiwan Institute of Economic Research (TIER) said Thursday.

TIER, one of the leading think tanks in the country, said that the composite index for the local manufacturing sector fell 0.75 points in January from a month earlier to 10.85, but remained in the yellow-blue category, which ranges between 10.5 and 13 points.

The lower score in January reflected a reduced number of business days due to the six-day Lunar New Year holiday that started Jan. 27, the think tank said.

Furthermore, the first quarter is usually a slow season for many industries in the local manufacturing sector, TIER said.

TIER uses a five-color coded system to describe domestic economic activity, with red indicating overheating, yellow-red fast growth, green stable growth, yellow-blue sluggish growth and blue contraction.

Among the five factors in the composite index, only the sub-index for investments in raw materials increased in January, rising 0.04 points from a month earlier, according to TIER.

The sub-indexes for demand dropped 0.49 points, pricing 0.17 points, business 0.09, and environment and operating 0.04, the TIER data showed.

The local semiconductor industry, including businesses such as pure wafer manufacturing, dynamic random access memory chip production, and integrated circuit packaging and testing services, were in a slow period as international brands were engaged in a product transition, TIER said.

A stronger Taiwan dollar also affected the export-oriented semiconductor industry in January, the think tank said.

As a result, the sub-index for the electronics component segment continued to flash a yellow-blue light, TIER said.

In January, the base metal segment flashed a green light as the impact from the reduced number of business days in the month was offset by an increase in product prices, TIER said.

The machinery business also flashed a yellow-blue light due to lower sales in January, while the textile industry flashed a blue light as many local exporters faced a supply glut amid stiff competition in the global market, TIER said.

The rubber and plastics segment also flashed a blue light, due to the reduced number of business days in January, as did the auto/auto parts industry in reflection of weaker than expected demand and foreign exchange losses, TIER said.

Source: Focus Taiwan News Channel