Wed, Feb 02, 2011 - Page 12 News List

Manufacturing flashes yellow-blue

MIXED SIGNALS:While the manufacturing sector’s signal could indicate a potential downturn, the textile sector flashed yellow-red, the sign for a transition to a boom

By Crystal Hsu  /  Staff Reporter

The nation’s manufacturing business climate flashed the “yellow-blue” light in December, ending six consecutive “green” signals, on waning growth momentum in the sector, a local think tank said in a report yesterday.

The manufacturing sector saw its cyclical movement slowing further to 12.96 points in December, down 1.59 from a month earlier and below the green — or stable — threshold of 13 points, the monthly report by the Taiwan Institute of Economic Research (TIER, 台經院) said.

“The latest data shows that the industry’s business outlook turned from stable to gear-shifting,” the institute said. “The trend fuels concern over a downturn, although it is premature to reach a conclusion.”

A green light indicates a stable prospect, while the yellow-blue signal suggests a downward transition, according to TIER.

Overall, the manufacturing sector, which accounts for about 25 percent of the nation’s GDP in terms of output value, gained 16.56 percent year-on-year in the fourth quarter, flagging from a 20.88 percent increase in the third quarter, government data showed.

The industry expanded at 42.59 percent and 34.53 percent in the first and second quarters respectively, the -Directorate-General of Budget, Accounting and Statistics said on Monday, before a global technology correction cycle set in.

For the whole of last year, the manufacturing sector grew 26.69 percent from the year-earlier level, the statistics showed.

The Council for Economic Planning and Development has said that the nation aims to help boost the service sector, making it one of the twin engines driving the economy over the next decade.

“Manufacturers’ low profit margins renders the transformation desirable and necessary if Taiwan is to gain economic weight in the region and on the world stage,” Council for Economic Planning and Development Minister Christina Liu (劉憶如) said previously at a public function.

In December, the business climate signal for textile makers remained at odds with the overall trend, flashing its seventh consecutive “yellow-red” light, an indicator for a transition to a boom, TIER report said. The think tank attributed that to soaring international cotton prices.

The business signal for -ma--chinery equipment makers turned from yellow-red to green, the first sign of slowdown in 11 months, TIER said, calling attention to a potential cyclical reversal.

The computer, optical products and electronics segments posted their fourth straight “yellow-blue” light, in line with a global demand correction, the report said.

Basic metal and metal product makers also reported sagging business, as did non-metal product makers, the report said.

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