The climate gauge for the nation’s manufacturing sector in September remained “yellow-red” for the fifth consecutive month, reflecting fast growth, even though port congestion and supply chain disruptions posed uncertainty and drove up operational costs, the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday.
The composite index for the manufacturing sector fell 0.21 points to 16.27 from August, as power rationing and emission restrictions in China slightly weighed on input activity, but the index remained just inside the “yellow-red” range of 16 to 18.5 points, the Taipei-based institute said.
EVERGRANDE WOES
Photo: Chen Rou-chen, Taipei Times
While cash woes plaguing Chinese property developer China Evergrande Group (恆大集團) also dampened sentiment, share prices of electronics, machinery equipment and telecommunication companies picked up, lending support to the overall score, it said.
The institute uses a five-color system to gauge manufacturing activity, with “blue” suggesting recession, “yellow-blue” a slowdown, “green” stability, “yellow-red” fast growth and “red” overheating.
It was the seventh month this year that the manufacturing sector reported a yellow-red reading, the institute said.
Among the five components in the composite index, the sub-index on the operating environment gained 0.38 points, while selling prices were flat, as the peak season might be over for some sectors with correction pressure building, it said.
The input measure lost 0.29 points and the cost tracker shed 0.01 points, it added.
The reading for industries supplying essential goods, such as textile products, was yellow-red, although lockdowns in Vietnam caused supply chain disruptions, it found.
Most Taiwanese textile companies operate manufacturing facilities in Vietnam to save on production costs.
Strong exports pushed up demand for cardboard boxes, causing their prices to increase, the institute said.
The measure also turned yellow-red for manufacturers of petrochemical and plastic products, supported by soaring crude and oil product prices, it said.
However, container shortages and port bottlenecks abroad have delayed their input schedule, it added.
Base metal suppliers reported double-digit percentage growth in business as they continued to benefit from increasing infrastructure spending in the US and Europe, the institute said, adding that machinery equipment vendors were less impressive, reporting steady sales.
Business at electronic component providers remained robust on the back of new product launches and insatiable demand for 5G technology and Internet of Things applications, the institute said.
PENT-UP DEMAND
Auto parts suppliers reported price hikes amid pent-up demand for vehicles, but port congestion and a global chip shortage stretched delivery times, causing the vehicle market in China to slow down, which has turned the reading for related sectors in Taiwan to yellow-blue, it said.
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