Manufacturing sector emerges from 5 months of contraction

Taiwan's Yang Ming shipping company loads their containers on a ship leaving from the northern Taiwan harbor of Keelung on their first direct voyage to mainland China, Monday, Dec. 15, 2008. According to Taiwan Institute of Economic Research, local manufacturing sector rebounded in April from five months of production decline, with the index that gauges the sector’s performance showing growth. (NOWnews/AP)

TAIPEI (CNA) – The local manufacturing sector rebounded in April from five months of production decline, with the index that gauges the sector’s performance showing growth, Taiwan Institute of Economic Research (TIER) said on May 30.

Data from TIER, one of Taiwan’s leading think tanks, showed that the composite index for the manufacturing sector rose 1.20 points in April from the previous month to 10.72.

At 10.72 points, the index entered the “yellow-blue” category, which is between, 10.5 and 13 points and signals sluggish growth.

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.

TIER said the composite index for the manufacturing sector also moved higher in April as the year-on-year drop in export orders slowed.

In April, Taiwan’s industrial production rose 1.04 percent from a year earlier, due mainly to strong demand for computers and optoelectronic products, compared with a 9.38 percent year-on-year decline in March.

Meanwhile, export orders fell 3.7 percent from a year earlier, shrinking from a 9.0 percent decline in March.

Of the five factors that make up the composite index, four moved higher in April, while the sub-index for pricing dropped by 0.26 points from a month earlier.

The sub-indexes for demand, purchases of raw materials, the general business climate, and operating costs rose 0.76, 0.50, 0.15 and 0.04, respectively, in April from a month earlier, TIER said.

Meanwhile, the operations of 53.88 percent of the manufacturers in TIER’s monthly survey showed contraction in April, compared with 74.10 percent in March, while 24.03 percent showed sluggish growth, compared with 22.50 percent the previous month, according to the data.

The survey indicated 19.98 percent of the polled manufacturers said their operations flahsed a green light in April, up from 3.40 percent in March.

Despite the rebound in the April composite index for the local manufacturing sector, TIER said, the global economy remained overshadowed by concerns over the trade frictions between the United States and China.

However, the trade disputes have prompted many Taiwanese firms operating in China to return home, which is expected to boost domestic demand and the local economy, TIER said. ●

By Pan Tzu-yu and Frances Huang