Manufacturing sector stays stable in July but index falls

Taipei, Aug. 30 (CNA) The local manufacturing sector remained stable in July, although an index gauging manufacturing conditions moved lower slightly from a month earlier largely amid uneven recovery, the Taiwan Institute of Economic Research (TIER) said Friday.

Data compiled by TIER, one of the leading think tanks in Taiwan, showed the composite index assessing the manufacturing sector's fundamentals fell 0.51 points from a month earlier to 13.46, continuing to flash a "green" light, which ranges between 13 and 16.

It was the fourth consecutive month the local manufacturing sector flashed a green light, TIER data showed.

TIER uses a five-color system to assess economic activity in the sector, with "red" indicating overheating, "yellow-red" showing fast growth, "green" representing stable growth, "yellow-blue" signaling sluggish growth, and "blue" meaning contraction.

The think tank said that the local information and communication industry continued to improve as international brands rebuilt inventories in preparation for the debut of new gadgets.

However, Typhoon Gaemi, which hit in July, interrupted the production of many manufacturers after cutting short the number of business days, while the old economy sector reported an uneven rebound, TIER said.

In addition, volatility on the stock markets at home and abroad in July after many American firms reported weaker-than-expected results also prompted many manufacturers to become less upbeat about their operations over the next six months, TIER said.

In the July index, four of the five factors trended lower with only the sub-index on demand rising 0.23 points from a month earlier in July.

The sub-indexes on purchases of raw materials, the general business climate, costs, and prices moved lower from a month earlier in July by 0.55, 0.11, 0.04 and 0,04, respectively, TIER said.

Citing a survey conducted in July, TIER said 31.56 percent of respondents in the local manufacturing sector said their business flashed a blue light, compared with 18.49 percent in a similar poll conducted in June, while 26.04 percent of them said their operations flashed a green light in July, down from 27.02 percent in June.

In addition, 17.43 percent of respondents said their business flashed a yellow-blue light in July, down from June's 24.04 percent, while 13.42 percent of them said their operations flashed a yellow-red light in July, down from 22.98 percent in June, the survey found.

TIER said on the back of global solid demand for artificial intelligence applications and high-performance computing devices, the electronics component industry flashed a consecutive second yellow-red light in July.

In addition, the computer and optoelectronics industry also benefited from AI technologies becoming increasingly popular and the move by international brands to build up inventories before the debut of new consumer electronics products, flashing a yellow-red light for the third month in a row in July, TIER said.

In July, the plastics and rubber industry flashed a green light for the fourth consecutive month due to a rebound in export orders, while the auto and auto part industry suffered a decline in investments of raw materials and flashed a blue light, compared with a yellow-blue light in June, according to TIER.

Looking ahead, TIER said the outcome of the presidential election in the United States in November could influence the U.S. economy, while whether the demand for AI gadgets continues will dictate Taiwan's exports.