Fri, Jul 01, 2016 - Page 12 News List

Manufacturing index falls on volatile equities

By Crystal Hsu  /  Staff reporter

The composite index for the domestic manufacturing industry flashed the 14th “blue” signal in May with the total score falling, indicating that operating conditions deteriorated due to volatility on global equity markets, the Taiwan Institute of Economic Research (TIER, 台經院) said in a report yesterday.

The index lost 0.23 points to 9.89 from April’s 10.12, keeping the monitor signal in recession.

According to the TIER, points below the 10.5 mark indicate a recession and those below 13 suggest a slowdown, while values above the neutral 16 threshold signify an upturn.

“Uncertainty over the global economy and raw material prices dampened investment interest,” the Taipei-based institute said.

The composite index measures the health of the manufacturing industry by analyzing five factors: demand, selling prices, production costs, raw material consumption and operating environment.

The raw material sub-index saw the greatest decline of 0.46 points month-on-month, followed by the operating environment sub-index which lost 0.42 points and the production costs sub-index, which retreated by 0.14 points, the survey showed.

However, the demand sub-index gained 0.46 points, while the selling prices sub-index rose by 0.32 points, the survey showed.

Among the 96 companies operating in the local manufacturing industry surveyed by the institute, 75.24 percent said their business had contracted, while 13.61 percent said their business was sluggish.

Textile companies fared worst due to a supply glut and rising competition, the survey found.

Plastic product manufacturers also struggled, as oil prices remained 20 percent lower then a year earlier, although they improved from the levels in April, the survey showed, while the economic slowdown in China also helped to constrain demand.

The languid conditions extended to electronics firms, although semiconductor companies displayed robust performance, as the global technology product cycle has not yet regained its growth momentum, the survey showed.

Local smartphone vendors and critical component suppliers saw their shipments shrink more than 20 percent in May from a year earlier, the survey showed.

Automakers and auto parts providers fared better thanks to discounts and other promotional campaigns, it showed.

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