Manufacturing sector stays stable for 3rd straight month

The local manufacturing sector continued to show stable growth in December as an index gauging how manufacturers were doing flashed a "green light" for the third consecutive month, the Taiwan Institute of Economic Research (TIER) has found.

The composite index for the manufacturing sector fell 1.27 from a month earlier to 14.15 in December, but the figure was still in the "green light" range between 13 and 16, according to data compiled by the TIER, one of the leading economic think tanks in Taiwan.

During the 12 months of 2021, Taiwan's manufacturing sector flashed a red light, seven yellow-red lights and four green lights, indicating the sector was growing steadily despite the COVID-19 pandemic, TIER data showed.

The think tank uses a five-tier system to assess economic activity in a given sector, with red indicating overheating, yellow-red indicating fast growth, green representing stable growth, yellow-blue signaling sluggish growth, and blue indicating contraction.

According to the TIER, the manufacturing sector was helped by higher vaccination rates worldwide, which enabled the United States and European countries to relax COVID-19 restrictions and allow business activity to grow.

Many countries also used fiscal stimulus measures to strengthen their economies, which continued to drive global demand higher for tech gadgets and raw materials, helping Taiwan's export-oriented manufacturers.

In December alone, the sub-indexes for prices and costs remained unchanged from a month earlier, while the sub-indexes for demand, the general business climate and raw material purchases moved lower by 0.93, 0.19 and 0.26, respectively, compared to November, the TIER said.

According to the December survey, there was slightly more caution than in previous months.

About 9 percent of respondents thought their businesses flashed a blue light in December, up from 6.89 percent in the November survey, and 23.25 percent said their businesses flashed a yellow-blue light, up from 12.89 percent a month earlier.

Some 45.62 percent of those polled said their businesses flashed a green light in December, up from 39.24 percent in November, and 14.28 percent and 7.86 percent said their businesses flashed a yellow-red light and a red light, respectively, the TIER said.

The think tank said Taiwan's tech sector continued to benefit from price hikes driven by rising demand, in particular for semiconductors, while non-tech sectors such as plastics, machinery, and base metals were hurt by an economic slowdown in China and a relatively high base of comparison in November.

In addition to its moderating pace of growth, China has imposed strict restrictions to prevent the spread of COVID-19, which could affect industrial development across the Taiwan Strait in 2022, the think tank said.

The performance of Taiwan's manufacturing sector in 2022 will also depend on whether bottlenecks in the global supply chain are resolved, and it will also have to overcome a relatively high base of comparison in 2021, the TIER said.

Source: Focus Taiwan News Channel