The climate monitor for Taiwan’s manufacturing industry last month showed a depressed economy amid weakened demand, suppressed selling prices and dampened operating conditions, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The TIER business composite index was 9.7, shedding 1.18 points from a month earlier, heading into a recessionary zone for the first time since August 2020.
The Taipei-based think tank attributed the retreat mainly to continued monetary tightening in the US and Europe intended to fight inflation, which has curtailed demand for goods and services.
Photo: Sean Chao, Taipei Times
China’s surge in COVID-19 infections has also lent uncertainty to an ongoing slowdown previously induced by oppressive disease control measures and other disruptions.
Export orders and manufacturing growth are expected to continue to contract over the next few months amid inventory adjustments, government data showed.
The largest decrease was in demand, with a drop of 0.67 points, followed by a 0.27 point decline in operating conditions, TIER’s monthly survey showed.
Input and selling price measures edged down 0.19 points and 0.11 points respectively, while the cost reading gained 0.06 points, it showed.
Local manufacturers are the mainstay of exports, which account for 60 percent of the nation’s GDP.
About 72.4 percent of companies experienced a business downturn, swelling from 41.2 percent in October, TIER said, adding that 27 percent described their operations as “sluggish,” and less than 1 percent managed to hold steady. No respondent posted growth.
Textile and pulp suppliers took a hit from slumping demand in the US and Europe, despite resilient sales at home, the institute said.
Similarly, makers of petrochemical and plastic products remained weighed by inventory corrections, although the entry of more players helped reduce cost burdens, it said.
Base metal product vendors are tightening their belts to cope with conservative purchasing strategies by upstream and downstream clients, it said.
The global economic slowdown is hitting non-tech manufacturers harder than tech firms, given that demand for chips used in 5G and high-performance computing remains strong, TIER said.
However, sales of smartphones, computers, wearables and peripheral products tumbled, as people assign prefer in-person experiences in the post-COVID-19 era, it said.
Transportation tool makers reported soft business as inflation affected vehicle purchases, it said.
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