Taiwan's manufacturing sector in contraction mode in Aug

03 Oct '19

2 min read

Pic: Taiwan Institute of Economic Research

Taiwan's manufacturing sector was in contraction mode for the 10th consecutive month in August amid lingering concerns over the US-China trade friction, according to the Taiwan Institute of Economic Research (TIER), which recently said manufacturers remained anxious over global demand, hurt by the trade conflict that shows no sign of being resolved soon.

Although the composite index for the manufacturing sector for August rose by 0.20 points from a month earlier to 9.21, the score remained in the ‘blue light’ (contraction) range of 10.5 points or below, data released by the think tank showed.

A silver lining for Taiwan, however, has been greater investment at home by Taiwanese manufacturers operating in China to avoid higher tariffs imposed by the US on Chinese goods, in turn boosting overall activity in Taiwan, TIER said.

The think tank 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 contraction.

Out of the five factors of the composite index, the sub-indexes on two factors -- pricing and the general business climate -- moved higher in August, up 0.29 and 0.21, respectively, from a month earlier, TIER said.

The sub-indexes on demand, costs and purchases of raw materials moved lower in August, falling 0.11, 0.10 and 0.08, respectively, from a month earlier, it said.

Regardless of their fluctuations in August, the five factors all continued to flash "blue lights," indicating contraction, during the month.

Meanwhile, 76.44 per cent of manufacturers in the TIER's monthly survey said their businesses flashed a blue light in August, down from 79.93 percent in a similar poll in July, while 19.73 per cent flashed a yellow-blue light, up from 15.29 per cent.

Some 3.54 per cent of businesses flashed a green light in August, down from 4.79 per cent in July, while about 0.29 percent flashed a yellow-red light and none flashed a red light.

The garment and fashion industry outperformed the overall manufacturing sector in August, flashing another green light due to a fall in inventory levels and an increase in orders to meet demand for the 2020 Tokyo Olympic Games, TIER said.

The chemical material sector flashed a blue light in August, unchanged from a month earlier as some manufacturers in the sector did annual maintenance, the think tank added.

Fibre2Fashion News Desk (DS)

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