Manufacturing sector shows sluggishness for 6th straight month

Taiwan’s export orders fell 2.1 percent and exports dropped 3.4 percent year-on-year in November as foreign buyers put their purchasing plans on hold because of the rising uncertainty. (NOWnews)

TAIPEI (CNA) — Hurt by weaker than expected global demand and trade tensions between the United States and China, Taiwan’s manufacturing sector remained sluggish for the sixth straight month in November 2018, the Taiwan Institute of Economic Research (TIER) said.

The TIER, one of Taiwan’s leading think tanks, said on Jan. 3 that falling smartphone sales, inventory adjustments in the global semiconductor sector, and uncertainty from the U.S.-China trade skirmish continued to hurt the manufacturing sector.

The think tank said the composite index for the sector fell 1.23 from a month earlier to 10.79 in November, the lowest level since March 2018, when the index stood at 10.45. The November figure stayed in the “yellow-blue” range between 10.5 and 13.

The TIER 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 a contraction.

Taiwan’s export orders fell 2.1 percent and exports dropped 3.4 percent year-on-year in November as foreign buyers put their purchasing plans on hold because of the rising uncertainty.

Though the U.S. and China will hold trade talks next week, few can be sure both sides will resolve their disputes anytime soon, the TIER said.

Of the five factors making up the composite index, only the sub-index on operating costs moved higher, rising 0.19 from a month earlier in November, the think tank said. The other four sub-indexes representing demand, purchases of raw materials, pricing and the general business climate moved lower by 0.65, 0.43, 0.27 and 0.07, respectively, from a month earlier in November, the TIER said.

About 51.46 percent of the manufacturers covered by a survey conducted by the TIER report flashed a blue light in November, up from 22.86 percent in a similar poll for October, and 37.30 percent of them flashed a yellow-blue light, down from 47.36 percent. Only 11.25 percent of them flashed a green light, down from 28.14 percent.

The TIER said a fall in international crude oil prices sent raw material prices lower and hurt petrochemical firms, resulting in the local chemical industry flashing a blue light in November, compared with a yellow-blue light in October.

The TIER said that if the global oil market continues to be volatile, local raw material suppliers will likely experience problems down the road.

The local semiconductor industry also flashed a blue light in November, down from a yellow-blue light in October on the back of disappointing demand for smartphones and weak sales in mining devices used for cryptocurrency transactions, the TIER said.

Another industry flashing a blue light in November was the local auto/auto parts industry, unchanged from a month earlier, due to a fall in car sales from October and escalating competition from imported models.

By Pan Tzu-yu and Frances Huang