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Manufacturing sector slows down in May: TIER

TAIPEI, Taiwan -- Although May's index for the manufacturing sector and exports grew year-by-year, momentum declined compared to April, according to a report released by the Taiwan Institute of Economic Research (TIER) yesterday.

The economic index for the manufacturing sector dipped from 12.6 in April to 11.89 in May, flashing a blue-yellow signal to represent a slowdown in the sector for the third consecutive month.

According to TIER's survey, about 30 percent of local manufacturers experienced a sluggish “blue” economy in May, up 1.08 percentage points from April.

About 48 percent of local manufacturers experienced a slowdown “yellow-blue” economy, representing a staggering 22.6-percentage-point surge from the previous month.

Roughly 17 percent of manufacturers encountered a stable “green” economy, down from 33.33 percentage points the previous month. About 5 percent of manufacturers experienced a growing “yellow-red” economy. However, none enjoyed a booming “red” economy.

Electronics Industry Slows Down

Sales of mobile devices have outperformed, driving demand for foundry, integrated circuits (IC), DRAM and IC packaging. Nevertheless, the electronics and machinery industry did not fare as well as expected.

Among them is the display panel industry, which has encountered fierce competition from players from China and South Korea. The electronics parts and components industry's health shifted from stable in April to slowdown in May. The computer, electronics and optical products industry suffered from deteriorating demand, and its health shifted from slowdown to sluggish.

In the commodity sector, the textile industry underperformed in May, which is considered a slow season for the clothing industry, according to the TIER. The textile industry remained stable “green,” while the clothing industry exhibited slowing “yellow-blue” in May. The rainy season in May resulted in higher food prices. However, lower demand resulted in a stable “green” performance in the food sector in May.

Transportation Sector Remains Stable

For the petrochemical and plastics industry, turmoil in Ukraine and Iraq contributed to slight gas price increases, which was expected to benefit local oil industries. However, local firms were closed several days during the Duanwu Festival in May, resulting in delayed shipment and consequently lower sales figures and a “yellow-blue” economy for the oil and coal producers. The rubber industry was also impacted by the Duanwu Festival and experienced sluggish “blue” performance.

In the metal and machinery sector, the steel industry was affected by oversupply in mainland China. The metal industry remained “blue” in May. The machinery industry has benefited from a recovering global economy and received more orders in May, and experienced a growing “yellow-red” performance.

In the transportation sector, statistics showed more purchases were made on cars and motorcycles domestically. Foreign demand for vehicle-related parts and components also grew in May. Nevertheless, the production lost momentum compared with that in April. All in all, the vehicle-related performance was “green” in May.

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