The climate gauge for the nation’s manufacturing sector in September remained “yellow-blue” for the seventh consecutive month, as major economic barometers such as exports, export orders and industrial output took a hit from global economic woes, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The TIER business composite index posted 10.53, down 0.62 points from a month earlier, as demand, raw material input, operating conditions and cost measures all posted negative cyclical movements, TIER said.
The Taipei-based institute attributed the general downtrend to stubbornly high global inflation that prompted drastic monetary tightening by major central banks, weakening demand for Taiwan’s exports.
Photo courtesy of the Ministry of Education
China’s tight COVID-19 restrictions and the military conflict between Russia and Ukraine suppressed economic activity and slowed inventory adjustments, it said.
The pace of retreat is therefore most evident from the demand perspective, followed by raw material input, the operating environment and the cost factor, the institute said, adding that the index is leaning closer to a “blue” reading which signifies a recession.
Though the release of Apple Inc’s new iPhone series helped support local chipmakers and suppliers of memory chips and other electronic devices, the nation’s industrial production slipped into contraction in September, ending 34 months of gains, the institute said.
The climate reading for the electronics sector, the main export driver, remained trapped in a listless state, as major tech firms gave guidance that inventory corrections would persist until the second half of next year, it said.
Non-tech sectors were equally gloomy. Manufacturers involved in the supply of paper, cotton and textile products said demand in US and European markets tumbled amid high inflation, although domestic business showed improvement after the government relaxed its COVID-19 measures.
Makers of petrochemical and plastic products saw output shrink by double percentage points due to declines in business and profit margins, the institute said, adding that some firms opted to conduct annual maintenance to cope with the downward cycle.
Makers of plastic products were grappling with dwindling demand for personal protective equipment and anti-COVID-19 products, as the world emerged from lockdowns, the institute said.
The yellow-blue reading also affected auto parts suppliers in September, when the number of new license plates dropped 12 percent, the institute said.
Companies in the sector benefited from an increase in demand and input readings, but overall vehicle sales remained constrained by chip shortages, it said.
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