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Manufacturing sector continues to flash blue light

Manufacturing sector continues to flash blue light

The local manufacturing sector continued to flash a blue light in November, indicating a contraction, at a time when the local economy remains in the doldrums, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said Wednesday.

It was the eighth consecutive month in which the TIER-compiled composite index for the local manufacturing sector had flashed a blue light, although the index showed signs of recovery.

In November, the composite index of the local manufacturing sector stood at 10.35 points, which remained in the blue light range below 10.5 points, but the November figure was 0.22 points higher than October, the TIER said.

The institute uses a five-light 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.

The TIER said that as international crude oil prices remained low amid falling global demand, Taiwan's mineral product exports have fallen at a double-digit pace, while some petrochemical production lines have been closed for annual maintenance, affecting oil product sales accordingly.

The think tank said that the weakness of the global oil market has prompted many downstream petrochemical firms to put their purchasing plans on hold, hoping to take advantage of even lower oil prices, which has further impacted the local petrochemical industry. The sub-composite index of the local petrochemical sector kept flashing a blue light, the think tank added.

While the steel industry still felt the pinch of the impact resulting from low-priced steel products sold by China, some Taiwanese steel makers have turned more upbeat about market conditions over the next six months, the TIER said.

As a result, the sub-composite index for the local steel sector improved to flash a yellow-blue light in November, compared with a blue light in October, the TIER added.

The sub-composite index for the local machinery sector continued to flash a yellow-blue light in November since demand from China and the Association of Southeast Asian Nations market remained slow, according to the TIER.

Last month, the sub-composite index for the local electronics component industry flashed a blue light, compared with a yellow-blue light seen a month earlier, due to continued inventory adjustments, the TIER said, adding that the year-end shopping season failed to turn the unfavorable situation around.

The TIER said that the sub-composite index for the local computer/electronics/optoelectronics sector also fell in November to flash a blue light from a yellow-blue light seen in October. The sector remained weak amid lingering falling global demand.

The think tank said that the sub-composite index for the local auto/auto parts sector maintained a yellow-blue light in November on the back of strong demand for auto parts from the U.S. and China markets.

(By Chen Cheng-wei and Frances Huang)
ENDITEM/J


Updated : 2021-09-20 06:45 GMT+08:00