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Manufacturing sector flashes 7th straight 'yellow-blue' light

2018/01/30 22:31:52

CNA file photo

Taipei, Jan. 30 (CNA) The local manufacturing sector flashed a "yellow-blue" light in December, pointing to sluggish growth, partly because of slow season effects in the electronics industry, the Taiwan Institute of Economic Research (TIER) said Tuesday.

A stronger Taiwan dollar against the U.S. dollar and slower growth in international crude oil prices also affected the local manufacturing sector's operations in the month, TIER said.

It was the seventh consecutive month the local manufacturing sector has flashed a yellow-blue light, marking the longest stretch of yellow-blue signals since February 2015, TIER added.

TIER 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 a contraction.

According to TIER, one of Taiwan's leading think tanks, the composite index for the manufacturing sector fell 0.49 points from the previous month to 11.03, but it remained in the yellow-blue light range between 10.5 and 13.

In 2017, the local manufacturing sector flashed one green light, one blue light and 10 yellow-blue lights, TIER said. For the year as a whole, the local manufacturing sector flashed a yellow-blue light, TIER added.

The think tank's figures for December are consistent with statistics released by the National Development Council last week, which showed the composite index of monitoring indicators flashing a yellow-blue light in the month.

According to TIER, of the five factors that make up the composite index for the manufacturing sector, two moved lower but the other three rose from a month earlier in December.

The sub-indexes for pricing and general business climate fell 0.72 and 0.49, respectively, from the previous month, while the sub-indexes for demand, operating costs and investments in raw materials rose 0.48, 0.16 and 0.09, respectively, TIER said.

Of the industries covered by the TIER survey, about 49.93 percent flashed a blue light in December, up from 34.47 percent in a similar survey in November, while 37.54 percent flashed a yellow-blue light, down from 40.73 percent a month earlier.

As for individual industries, TIER said, the paper sector flashed a yellow-red light in December, a downgrade from a red light one month earlier, in the wake of weakening demand and falling pricing power.

The machinery sector continued to flash a green light on the back of a rise in production automation and an increase in production equipment sales to the semiconductor and flat panel industries, TIER said.

Reflecting slow season effects, the semiconductor sector flashed a yellow-blue light in December, compared with a green light a month earlier. In addition, although faced with rising competition from imported models and continued inventory adjustments, the local auto/auto parts industry continued to flash a blue light in December, TIER said.

(By Tsai Yi-chu and Frances Huang)