Taiwan's manufacturing sector contracted for the fourth consecutive month in August, despite modest improvements in overall conditions, the Taiwan Institute of Economic Research (TIER) said today.
The composite index rose to 9.24 points, up 0.88 from July, supported by stronger technology shipments and orders, a weaker New Taiwan dollar, and easing impacts from US tariffs.
However, traditional industries continued to face weak demand and intense overseas competition, prompting many firms to scale back output or adjust production schedules. As a result, most sectors remained in the blue-light category.
Photo: Amy Yang, Taipei Times
TIER uses a five-color system to gauge economic activity: red for overheating, yellow-red for fast growth, green for stable growth, yellow-blue for sluggish growth and blue for contraction.
By sector, semiconductors benefited from robust demand for artificial intelligence products and restocking of consumer electronics, lifting the industry's from yellow-blue in July to green in August.
In contrast, the machinery sector stayed in the blue zone, as weak US, European and Southeast Asian markets dragged down orders and exports, offsetting gains from semiconductor equipment demand.
More than 60 percent of industries remained in decline, underscoring an uneven recovery across the manufacturing sector.
Looking ahead, TIER said that Taiwan's outlook remains closely tied to developments in the US and China.
In the US, tariff uncertainty is easing, although duties on semiconductors remain unresolved, while the US Federal Reserve has signaled a cooling labor market and lingering inflationary pressure from tariffs.
In China, "anti-involution" measures and market support policies aimed at reducing cutthroat competition could help ease deflation risks, although their effectiveness in boosting consumer confidence and growth remains unclear.
TIER cautioned that global uncertainties continue to pose risks in the second half of this year, urging manufacturers to stay alert to potential challenges.
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