Manufacturing sector sees sluggish growth for 5th straight month

Taipei, At a time of escalating trade tensions between the United States and China, Taiwan's manufacturing sector saw sluggish growth for a fifth consecutive month in October, according to the Taiwan Institute of Economic Research (TIER).

Weaker than expected global demand for the latest iPhones -- the iPhone XS, the iPhone XS Max and the iPhone XR -- which were unveiled in September, also affected the local manufacturing sector that features many companies in Apple's supply chain, TIER said.

The TIER, one of Taiwan's leading economic think tanks, said the composite index for the sector rose 0.54 points from a month earlier to 11.43 in October but stayed within the "yellow-blue" range between 10.5 and 13.

The TIER 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 a contraction.

Fang Chun-teh (???), a TIER economist, said the increase in the October composite index reflected high international crude oil prices and the launch of new devices by major brands, but lower than expected demand for the new iPhones compromised the sales of export-oriented manufacturers.

Taiwanese suppliers to Apple account for about 40 percent of the market capitalization of Taiwan's main stock exchange and over-the-counter market.

Fang said there are no signs that Washington and Beijing will resolve their trade disputes any time soon, meaning the global economy is likely to continue to feel the pinch of the thorny trade issue.

Out of the five factors of the composite index, three of the sub-indexes moved higher. The sub-indexes for demand, purchases of raw materials and operating costs rose 0.56, 0.08 and 0.02, respectively, from a month earlier in October, the TIER said.

The sub-indexes for pricing and the general business climate moved lower by 0.09 and 0.05, respectively, in October, the institute said.

In October, the textile industry continued to flash a yellow-blue light in October amid escalating competition in the global market, while the rubber/plastics industry flashed a green light, unchanged from a month earlier, helped by high crude oil prices, the TIER said.

The machinery industry continued to flash a yellow-blue light as many machinery companies in Taiwan became more cautious about their business outlook because of the trade dispute between Washington and Beijing.

The base metal industry also flashed a yellow-blue light again in October after registering only a single-digit increase in export orders for a third straight month, the TIER said.

The electronics industry saw its situation improve from a blue light in September to a yellow-blue light in October, but the cautious outlook over global demand for mobile devices remained, the institute said.

A blue light continued to flash in the auto and auto parts industry as local car brands saw increasing competition from their foreign counterparts in the domestic car market, the TIER said.

Source: Focus Taiwan News Channel