The manufacturing industry’s business climate monitor in October flashed “yellow-blue” for a fourth consecutive month, indicating sluggishness, as the operating environment and demand picked up, but selling prices and input budget dropped further, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The composite index compiled by the Taipei-based think tank gained 0.76 points to 11.59, indicating listless manufacturing activity, as inventory adjustments lingered due to weak end-market demand.
TIER uses five levels to capture the industry’s cyclical movements, with “red” indicating a boom, “green” suggesting steady growth and “blue” signifying a downturn.
Photo: Tien Yu-hua, Taipei Times
Yellow-blue indicates a tepid state and yellow-red a pickup in growth momentum.
Manufacturers that reported a decline in business eased from 40.87 percent in September to 30.36 percent in October, while firms that experienced a slowdown dropped from 50.22 percent to 41.92 percent, the monthly survey found.
Companies whose business remained steady increased from 7.87 percent to 26.79 percent, while firms that reported an increase slid from 1.04 percent to 0.93 percent, it said, adding that none saw a boom.
Electronics companies said that business was steady, as robust demand for artificial intelligence (AI) and cloud services lifted the suppliers of servers and graphic cards by double-digit percentage points, TIER said.
That helped offset continued inventory corrections at chipmakers and optical device vendors, it said.
The AI bonus underpinned the uptick in subindices of operating conditions, demand and costs, while sticky global inflation and restrictive monetary policies continued to weigh on other subindices, such as selling prices and input spending, the institute said.
Suppliers of transportation tools and auto parts also said that business was steady, backed by healthy auto sales in Taiwan, it said.
Furthermore, a growing number of Taiwanese firms are taking part in the global supply chains of electric vehicles (EVs) and benefited from increasing EV demand in China and the US, TIER said.
Textile and paper product makers remained mired in a recession, as a global slowdown curtailed demand and rivals from China cut prices to win customers, the institute said.
The Israel-Hamas war boosted international oil prices and benefitted local petrochemical product makers, lifting their business climate gauge from blue to yellow-blue.
Base metal suppliers floundered due to soft restocking demand from downstream customers, stopping them from buying input materials, the institute said.
Metal product vendors fared better, thanks to demand from consumer electronics gadgets ahead of the holiday season, it said.
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