The business climate monitor for the manufacturing industry turned “blue” in March, from a revised “yellow-blue” in February, as demand, selling prices and operating conditions weakened, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The business composite index compiled by the Taipei-based think tank shed 0.56 points to 10.41, reflecting listless manufacturing activity, as global clients continued to adjust inventory amid poor sales.
TIER uses a five-color spectrum to capture the industry’s movements, with “red” indicating a boom, “green” suggesting steady growth and “blue” signifying a downturn. Dual colors indicate a transition to a better or worse condition.
Photo: CNA
Taiwan is home to the world’s leading suppliers of electronics used in smartphones, personal computers, wearables, TVs, vehicles and cloud computing.
A majority of local manufacturers, 51.75 percent, reported a decline in business, while 35.51 percent experienced a soft patch and 12.16 percent held steady, the institute’s monthly survey found.
None experienced a boom, it added.
The findings came even though firms in Taiwan and Asia emerged unscathed from bank failures in the US and Europe, TIER said.
The cost and input readings gained a meager 0.17 and 0.07 points respectively after the global economic slowdown cooled raw material prices and eased cost burdens, the institute said.
However, the gauges for demand, selling prices and overall operating conditions declined further, as inventory corrections dragged on, prompting local manufacturers to cut capacity to protect their margins.
For instance, petrochemical product suppliers opted to conduct annual equipment maintenance after outbound shipments and orders tumbled more than 30 percent from a year earlier, TIER said.
Plastic and rubber product makers saw business shrinking by a similar amount, despite the peak season starting, the institute said.
Tepid market demand in the US and Europe was to blame, but China added to the problem by cutting its dependence on one-off plastic products, it said.
Makers of textile products, while benefiting from rush orders in the wake of China’s reopening, saw sharper declines in production and business orders, as apparel brands turned conservative about inventory, it said.
Paper product vendors had a mixed showing, as a recovery in tourism and commerce boosted demand for shopping and packaging bags, but paper products for industrial use floundered, the institute said.
Vehicle sales picked up after chip shortages came to an end, enabling local suppliers of auto parts to report steady business growth, it said.
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