Taiwan's manufacturing sector continued to grow in June

Taipei, July 31 (CNA) Taiwan's manufacturing sector continued to grow in June, with the Taiwan Institute of Economic Research (TIER) saying Friday that its business climate indicator stayed in the "yellow-red" zone for a second consecutive month.

TIER said external orders and production indexes remained at high levels in June, driven by demand growth and higher raw material imports.

As a result, the manufacturing composite index, which measures the sector's overall health, rose 1.08 points from May to 17.30 in June, marking the second consecutive month that the indicator has flashed a "yellow-red" light, indicating rapid growth.

Among individual industries, the computer, electronics and optical products sector continued to flash a "red" light, indicating overheating, in June, buoyed by strong demand for cloud services and artificial intelligence (AI) infrastructure.

The sector saw increased orders for servers, switches and networking products, while exports, overseas orders and production indexes all posted double-digit year-on-year growth, TIER said.

The machinery sector also benefited from global semiconductor companies' capacity expansion, which boosted demand for related equipment.

Continued growth in orders for automation equipment kept exports, overseas orders and production indexes growing at double-digit year-on-year rates, pushing the sector's business climate indicator from a "yellow-red" light to "red," the research institute said.

Despite the positive June data, TIER warned that global uncertainties remain, with conflicts in the Middle East and fluctuations in international oil prices posing risks to energy supplies, financial markets and inflation.

It also noted that the U.S. government's ongoing tariff policies, including the Section 301 tariffs, could weigh on Taiwan's outlook.

However, TIER said that although global political and economic uncertainties remain, Taiwan's role in global technology supply chains and continued demand for AI, high-performance computing and cloud applications could help offset some of the adverse effects of geopolitical risks.

Taiwan's manufacturing sector is expected to maintain steady growth, supported by demand across the AI supply chain and improved competitiveness among traditional industries, the institute added.