The manufacturing sector remains in weak growth due to weaker global demand

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Taipei, Oct. 1 (CNA) The local export-oriented manufacturing sector continued to grow at a slow pace in August as it felt the pinch from weakening global demand, according to the Taipei Institute of Economic Research. Taiwan (TIER).

Data compiled by TIER, a leading economic think tank in Taiwan, showed the composite index, which measures the fundamentals of the manufacturing sector, fell 0.16 points from the previous month to 11, 01 in August, flashing a “yellow-blue” light, with a score between 10.5 and 13.

This is the sixth consecutive month that the local manufacturing sector has posted sluggish growth. It came at a time when the world’s major central banks, particularly the US Federal Reserve, accelerated their pace of monetary tightening to curb the rapid growth of inflation, which has hurt the global economy and dampened demand. , said TIER.

In addition to a rate hike cycle seen in many countries, the global economy has also been affected by China’s zero-tolerance policy on COVID-19, TIER added.

The think tank uses a five-level system to assess economic activity in the sector, with red indicating overheating, yellow-red indicating rapid growth, green representing stable growth, yellow-blue indicating slow growth and blue indicating contraction.

Among the five factors in the August composite index, the sub-indices on commodity purchases and prices were down 0.41 and 0.20, respectively, from the previous month, TIER said.

In contrast to the slowdown, the demand, general business climate and cost sub-indices rose 0.20, 0.19 and 0.06, respectively, in August from the previous month, TIER added.

According to TIER, Taiwan has benefited from a decision by international consumer electronics brands to stockpile for the launch of their new products, as well as the popularity of emerging technologies.

However, the world’s major economies have seen their pace of growth slow, which has dampened growth in Taiwanese manufacturers’ export orders and overseas sales overall, TIER said.

TIER added that the slowdown in export growth prompted Taiwanese investors to reduce their purchases of raw materials for production and weakened their pricing power.

Citing a survey, TIER said 36.94% of local manufacturing respondents believed their operations flashed a blue light – indicating a contraction – in August, compared to 35.08% in a similar poll in July, while 47.07% of them said their business flashed a yellow-blue light – indicating slow growth, down from 42.42 a month earlier.

However, 14.68% of respondents agreed that their operations had been given the green light – indicating stable growth – in the August survey, compared to 22.45% in the July poll, TIER said.

As for individual industries, the electronic components industry continued to shine a yellow-blue light in August, TIER said, adding that overseas buyers had placed orders for their new product launches, but optoelectronics suppliers had suffered from lower demand in China.

The machinery industry turned a yellow blue light in August, down from a blue light in July, as semiconductor makers continued to buy equipment and public works projects continued, offsetting a decline in investment by US and European companies, TIER added.

The plastics industry, meanwhile, turned on a blue light in August, down from a yellow-blue light in July, as customers were cautious about their business prospects and cut back on orders.

The think tank said the future development of the US and Chinese economies will continue to dictate Taiwan’s overseas sales and local manufacturing performance.

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