Economic activity in the manufacturing sector remained “blue” for the ninth consecutive month last month, indicating continued weakness amid a global economic slowdown, the Taiwan Institute of Economic Research (TIER, 台經院) said in a report yesterday.
The think tank’s composite index for the industry decreased by 0.32 points from a month earlier to 9.01, after dropping to 9.33 points in November last year.
The figure shows prevalent pessimism among local manufacturers, TIER said.
The institute maintains a five-color system to reflect economic activity, with “red” indicating overheating, “yellow-red” showing fast growth, “green” representing stable growth, “yellow-blue” indicating sluggish growth and “blue” indicating recession.
While demand for sportswear and functional textiles remained strong, orders for other textile products were cut by slowing demand from China and increasing competition from emerging economies, TIER said.
The activity in petrochemical and rubber industries also remained soft, as their pricing power was eroded by a weakening global oil market, the institute said.
Anticipating a decline in product prices, many downstream firms in the sector put purchase plans on hold, the report said.
The steel industry also suffered from contraction due to a supply glut in China and sluggish global demand, it said.
As the effects of year-end demand are waning and shipments of handheld devices are slowing, while the computer, electronics, and optoelectronics industries contracted as well, it said.
The auto and auto parts industries fared better last month, with the sub-index signaling “yellow-blue” as the local automotive market gained shares, rising 20.46 percent from a month earlier, TIER said.
The manufacturing sector might continue to be affected by a slow global recovery and declines in international crude oil prices, it said.
As a result, the composite index for the sector might be “yellow-blue” this year, TIER said.
The textile industry could be “yellow-blue” this year, as expected improvements of the US and European economies might help increase sales, while the Olympic Games in Rio de Janeiro would boost shipments, the institute said.
However, slowing demand from China would continue to weigh down on economic activity, it said.
The petrochemical industry is likely to be at the “yellow-blue” level this year, as crude oil prices are likely to remain low, TIER said.
The electronics industry could also be in the “yellow-blue” level this year, due to moderate growth in shipments of handheld devices and escalating competition from China, it said.
The local auto and auto parts industries are expected to flash “yellow-blue” on a possible slowdown of demand from the Middle East, one of the major buyers of Taiwanese cars and vehicle components in recent years, the institute said.
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