Domestic manufacturing flashes blue again in March: TIER

By Kathy Chu ,The China Post

The local manufacturing sector flashed a blue light in March, indicating declining sentiment, the Taiwan Institute of Economic Research (TIER) announced yesterday.

Although the export orders and estimates of output and sales in March posted year-on-year decline, the total score of the index slightly increased 0.13 to 10.02 last month, because the decrease was smaller than in February. Over 70 percent of the sub-sectors surveyed by TIER flashed blue in March, which was the second consecutive month for the industry as a whole to see the blue light.

According to the Taipei-based think tank, lower-than-expected export orders and industrial production in March were the major reasons the economic indicator was not desirable, despite growth in export volume.

The monitoring indicators use different lights, similar to traffic signals, to represent the overall economic health of an industry. Colors include red, yellow-red, green, yellow blue, and blue. For instance, green expresses stability, red means that the economy is booming, and blue indicates a downturn.

Another economic figure, Industrial Production Index (IPI), posted a 3.28-percent year-on-year decrease in March, the biggest decline since January 2012, according to figures released yesterday by the Ministry of Economic Affairs (MOEA). The IPI fall was the industry’s second consecutive monthly drop. The index measures the amount of output from domestic industries. Manufacturing production accounts for 90 percent of the overall industrial output index.

The March IPI for the automobile and car parts industry posted a 9.2-percent decline. Computers and electronics, as well as optical products, dropped by 7.04 percent due to a shortage in smartphone components, while electronic parts and accessories dropped 1.47 percent due to significantly decreased orders from foreign clients.

Yellow-blue Light Likely in Second Quarter The TIER monitoring index is expected to climb and fall within the yellow-blue zone, which indicates sluggishness, while a blue light represents an economic slump, in the second quarter.

According to the think tank, the light is expected to turn yellow-blue in the second quarter due to the easing of several adverse domestic and international factors, including a looming solution to the U.S. fiscal crisis, continuing rises in the domestic stock market, the reduction of immediate danger in the Korean Peninsula, the limited fallout of the Boston bombing, and the control of the H7N9 epidemic.

In particular, the essential goods industry and the electronics industry may flash green for 2013, while the electronic components industry is expected to flash green in the second quarter.