Taipei-Taiwan's manufacturing sector was in contraction mode for the 10th consecutive month in August amid lingering concerns over trade friction between the United States and China, the Taiwan Institute of Economic Research (TIER) said Monday.
Manufacturers in Taiwan remained anxious over global demand, hurt by the trade war between the world's two biggest economies that shows no sign of being resolved soon, said the TIER, one of Taiwan's leading economic think tanks.
Although the composite index for the manufacturing sector for August rose 0.20 points from a month earlier to 9.21, the score remained in the "blue light," or "contraction," range of 10.5 points or below, TIER data showed.
A silver lining for Taiwan, however, has been greater investment at home by Taiwanese manufacturers operating in China to avoid higher tariffs imposed by the U.S. on Chinese goods, in turn boosting overall activity in Taiwan, the TIER said.
Efforts made by international brands to launch new electronics gadgets has also helped Taiwan's export-oriented manufacturing sector offset the global trade doldrums.
The think tank uses a five-color system to describe economic activity, with red indicating overheating, yellow-red showing fast growth, green representing stable growth, yellow-blue signaling sluggish growth and blue reflecting contraction.
Out of the five factors of the composite index, the sub-indexes on two factors -- pricing and the general business climate -- moved higher in August, up 0.29 and 0.21, respectively, from a month earlier, the TIER said.
The sub-indexes on demand, costs and purchases of raw materials moved lower in August, falling 0.11, 0.10 and 0.08, respectively, from a month earlier, the TIER added.
Regardless of their fluctuations in August, the five factors all continued to flash "blue lights," indicating contraction, during the month.
Meanwhile, 76.44 percent of manufacturers in the TIER's monthly survey said their businesses flashed a blue light in August, down from 79.93 percent in a similar poll in July, while 19.73 percent flashed a yellow-blue light, up from 15.29 percent.
Some 3.54 percent of businesses flashed a green light in August, down from 4.79 percent in July, while about 0.29 percent flashed a yellow-red light and none flashed a red light.
The garment and fashion industry outperformed the overall manufacturing sector in August, flashing another green light due to a fall in inventory levels and an increase in orders to meet demand for the 2020 Tokyo Olympic Games, the TIER said.
The chemical material sector flashed a blue light in August, unchanged from a month earlier as some manufacturers in the sector did annual maintenance, the TIER added.
The local metals industry also flashed another blue light in August, hurt by rising competition from China that pushed down product prices, the think tank said.
Also flashing a blue light was the electronics components industry, in which an ongoing supply glut among memory chipmakers offset the benefits of entering the peak season for the entire industry, the TIER said.
The auto and auto parts sector flashed a yellow-blue light in August after car and motorcycle sales fell 6.86 percent from a year earlier during the month as consumers stayed away from big ticket purchases due to Ghost Month, which fell from Aug. 1 to 29 this year.
Despite the recent weakness in the manufacturing sector, the TIER expected the high-tech sector to get back on track in the fourth quarter due to advances in 5G technology and the arrival of the peak spending season on consumer electronics, the TIER said.
The old-economy sector, however, is expected to remain bothered by weakening global demand due to the trade dispute for the rest of the year, the TIER said.
Source: Focus Taiwan News Channel