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Manufacturing sentiment improves in May

2018/06/25 16:23:34

Taipei, June 25 (CNA) The local manufacturing sector's outlook on the economy improved in May amid strong growth in exports of electronics components as emerging tech applications boosted global demand, the Taiwan Institute of Economic Research (TIER) said Monday.

TIER, one of Taiwan's leading economic think tanks, said the May composite index, which gauges sentiment in the manufacturing sector, rose 3.36 points from April to 101.69, after a fall of about 1.7 points a month earlier.

The rise in the composite index came after Taiwan's exports of electronics components in May rose 15.90 percent from a year earlier and export orders for electronics parts rose 14.0 percent year-on-year.

The sub-index for the property development sector continued to move in the opposite direction, however, falling 0.33 in May from a month earlier to 94.89.

It was the fourth consecutive monthly decline for the sector as the supply of homes increased and building material prices were on the rise, TIER said.

The composite index for the local service sector moved higher for the third month in a row in May to 101.69, up 1.89 from a month earlier, after the weighted index on the Taiwan Stock Exchange rose 2.04 percent in the month, TIER said.

Meanwhile, 37.4 percent of manufacturers polled in a TIER survey said the business climate improved in May, up from 29.4 percent in a similar poll in April, while 11.6 percent said the business climate deteriorated, down from 26.5 percent in the April poll.

The survey found that the electronics and machinery industries appeared more upbeat than any other industries in the manufacturing sector, according to TIER.

Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, said the composite index of the manufacturing sector is expected to expand in the third quarter, a traditional peak season for the sector.

Sun said he was particularly upbeat about new tech applications such as automotive electronics and smart devices.

He raised concerns, however, about raw material export growth over the next few months if international crude oil prices do not rise as they have been expected to.

The 11.2 percent year-on-year increase in Taiwan's exports for the first five months of this year resulted partly from higher raw material exports as foreign buyers wanted to build up inventories now before crude oil prices rose further.

But if the oil prices do not go up, those buyers will have excessive inventories and order less from Taiwanese exporters, Sun said.

When asked to comment on the possible impact of the simmering trade friction between the United States and China, Sun said both sides continue to threaten each other by imposing additional tariffs, but those tariffs have not yet been felt in the real economy.

The situation will have to be monitored for some time before any conclusions can be drawn, he said. (Bu Pan Tzu-yu and Frances Huang)