The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday that the local manufacturing sector may see sluggish demand through to the end of the year, with the business climate gauge flashing “yellow-blue” for the seventh consecutive month last month.
The headline composite index for the manufacturing sector issued by the Taipei-based think tank dropped to 10.69 points last month from a revised 11.89 points in September.
The index gauges the health of the manufacturing sector in terms of demand, selling prices, costs, production input and the operating environment, TIER said.
The institute uses a five-level scale to reflect the condition of the manufacturing sector — “blue” implies declining sentiment, “yellow-blue” represents sluggish conditions, “green” indicates a stable economy, “yellow-red” means sentiment is on the rise, while “red” means the economy is overheating.
“Despite industrial production and export orders both showing year-on-year growth last month, the continuous decline in exports and imports from a year ago is keeping sentiment gloomy in the manufacturing sector,” the institute said in its monthly report.
As most clients of local manufacturers have completed their orders ahead of the end of year shopping period, sentiment for manufacturers would continue to stagnate until the end of the year, said Gordon Sun (孫明德), director of the institute’s macroeconomic forecasting center.
Sun attributed the weakness in the manufacturing sector to a slowing global economy this year.
The economy in the US and Europe remained gloomy in the first half of this year, followed by weak sentiment in China and the other major Asian markets, which hurt Taiwan’s export-oriented economy, Sun said.
“[Compared with Western countries], the sluggish economy in Asia has impacted more on our economy, as exports to Asia usually account for about two-thirds of overall outbound shipments,” Sun added.
Sun said this has seen nearly all industries in the manufacturing sector with flat exports or fewer exports compared with the previous year, except for electronic components and mineral products.
In addition, food and beverage industries saw their sector flash “blue” last month, from “green” a month earlier, mainly due to the recent food safety issues, the institute’s report said.