Taiwan’s manufacturing sector continued to grow rapidly in June, as the global economy recovers from the COVID-19 pandemic and many countries reopen for business the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said on Friday.
Despite a surge in local COVID-19 cases in May and increased measures to curb transmissions in place until last week, export-oriented manufacturers largely remained unscathed, the institute said.
The TIER-compiled composite index for the local manufacturing sector rose to 17.89 in June, up 0.78 from a revised 17.09 in May and flashing “yellow-red” for the second consecutive month.
The institute uses a five-color system to describe economic activity, with “red” representing overheating, “yellow-red” showing fast growth, “green” representing stable growth, “yellow-blue” signaling sluggish growth and “blue” reflecting a contraction.
On the back of strong global demand for high-tech equipment and raw materials, Taiwanese manufacturers registered a surge in export orders, it said.
Three of the index’s five sub-indices increased, with the general business climate sub-index posting the strongest gain of 0.48.
In addition to strong exports, Taiwan’s booming stock market also boosted confidence in listed manufacturers, the institute said.
The sub-indices on raw material purchases and pricing were also up by 0.42 and 0.11, respectively, while the sub-indexes on demand and costs weakened by 0.23 and 0.01 respectively.
Citing a separate survey, the institute said that 38.7 percent of companies in June believed that the market was overheating, up from 31.79 percent in May; 41.51 percent believed the market was expanding quickly, down from 48.02 percent; and 14.90 percent expected stable growth, down from 15.33 percent.
The institute’s index for the electronics component industry flashed yellow-red, boosted by emerging technologies such as 5G and high performance computing.
Its index for the plastics and rubber industry flashed red, due to rising crude oil prices and growing raw materials demand, compared with yellow-red in May.
The index for the machinery industry flashed red, due to high demand from high-tech manufacturers seeking to expand production.
The index for the auto industry flashed green, compared with yellow-red in May, with the institute attributing the trend to fears among the public over the COVID-19 outbreak leading to vehicle sales plunging 32.5 percent annually.
Despite the government lowering a nationwide pandemic alert from level 3 to level 2 on Tuesday last week, it remains to be seen whether an increasing COVID-19 vaccination rate will lead to an improved pandemic situation, the institute said.
International factors that might affect Taiwanese firms, especially electronics manufacturers relying on global supply, are floods in China and outbreaks of COVID-19 in Southeast Asia, it said.
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