Manufacturing sector sluggish for 2nd straight month

Taipei, Nov. 29 (CNA) Taiwan's manufacturing sector remained sluggish for a second straight month in October due to an uneven recovery balancing strong high-tech players against a fragile old economy sector, the Taiwan Institute of Economic Research (TIER) said Friday.

The composite index assessing the manufacturing sector's fundamentals fell 0.68 points from a month earlier to 11.20 in October, the lowest level since February, when the index stood at 10.41, data compiled by the TIER, a leading Taiwanese think tank, showed.

The October index fell into the "yellow-blue" range, signaling a slowdown, between 10.5 and 13.

The TIER uses a five-color system to assess economic activity in the sector, with "red" indicating overheating, "yellow-red" showing fast growth, "green" representing stable growth, "yellow-blue" signaling sluggish growth, and "blue" meaning contraction.

Among the five factors in the October index, the sub-indexes for purchases of raw materials and pricing fell 0.67 and 0.38, respectively, from a month earlier.

The sub-indexes for the other three factors -- general business climate, demand and costs -- rose 0.22, 0.11 and 0.04, respectively, from a month earlier, the TIER said.

The TIER said exports from the old economy sector limited the growth of Taiwan's industrial production, which led to manufacturers scaling back purchases of raw materials as a whole during the month.

Citing a survey conducted in October, the TIER said 44.21 percent of respondents in the manufacturing sector said their business flashed a blue light, up slightly from 43.17 percent in a similar poll in September.

Another 26.25 percent of them said their operations flashed a yellow-blue light in October, up from 19.63 percent a month earlier, and 25.43 percent of them said their business flashed a green light in October, up from 23.76 percent in September.

The TIER said the electronics component sector continued to benefit from robust global demand for artificial intelligence (AI) applications and high performance computing (HPC) devices, which pushed up exports of semiconductors to the United States, the ASEAN bloc and India in October.

Electronics component exports to Japan, China and Europe weakened in October, however, offsetting the strength in the entire sector, resulting in a green light, the TIER said.

On the other hand, the base metal sector flashed a yellow-blue light in October as demand in the global steel market remained flat and low priced steel products sent ripples through the market, the TIER said.

Demand for stainless steel and select refined copper items from the U.S. and European markets, however, gave some support to the industry.

Looking ahead, the TIER said Donald Trump is expected to influence the global economy when he returns to the White House in January, especially if he carries out threats to impose 25 percent tariffs on goods from Canada and Mexico and raise tariffs on imports from China by 10 percent.

The TIER said Trump's tariff hikes and a plan to deport illegal immigrants are expected to boost inflationary pressures and in turn affect the Federal Reserve's monetary policies, which could affect demand and Taiwan's export-oriented manufacturing sector.