TIER flashes 'blue' signal after production index falls
By John Liu, The China PostTAIPEI, Taiwan -- A monitoring indicator for the manufacturing sector turned “blue” in August, signifying a sluggish economy, according to a report released by the Taiwan Institute of Economic Research (TIER) yesterday.
October 1, 2013, 12:09 am TWN
The production index dropped 1.25 points, from 11.22 in July to 9.97 in August, its second consecutive monthly decline. The indicator had flashed a “yellow-blue” signal — representing an economy transitioning from sluggish to stable — for four consecutive months before changing to a blue signal in August.
Imports dropped in August, showing that domestic firms were not willing to making investments, TIER's macroeconomic forecasting center director Gordon Sun (孫明德) said, adding that firms were stockpiling only small inventories. The manufacturing sector production index and imports dropped 0.59 percent and 1.48 percent, respectively, offsetting the impact of growth in exports.
Signals Across Manufacturers
The monitoring indicator flashed a “blue” signal for 62.54 percent of all industries in August, up from 27.22 percent in July, and flashed “yellow-blue” for 32.6 percent of all manufacturers, “green” for 4.47 percent of all manufactures, “yellow-red” for 0.39 percent of manufacturers, and “red” — representing booming — for no manufacturers, according to the TIER.
IT and Electronics
The production index for computer electronics, machinery equipment, and clothing manufacturing industries saw double-digit declines in year-on-year terms, TIER said.
Although exports of information communication technology products continued to grow in August, production capacity slowed. The production of computer electronic products and photonics products dropped 13.54 percent year-on-year, according to TIER. Its monitoring indicator continued to flash a “blue” signal.
Thanks to high demand from Intel, Qualcomm and MediaTek, orders of semiconductors and chip products continued to grow. The monitoring indicator for the electronics parts and components industry signal changed from “blue” to “yellow-blue” in August.
In the commodity sector, thanks to improved economic conditions in the U.S. and European countries, exports of textile products grew in August, and the sector's monitoring signal changed from “yellow-blue” to “green.”
Production levels in the clothing and accessories sector and leather product sector, however, did not exceed those in the previous year, and their monitoring indicators flashed “blue” and “yellow-blue” in August, respectively.
Sales volume dropped in August in the auto industry month-to-month, offsetting the impact of high exports of auto parts, and the sector's monitoring signal turned from “yellow-blue” to “blue.”
According to Sun, economic indicators from the second half of 2013 are projected to show increases across the board in comparison to numbers from the first two quarters. However, the pace of economic recovery has been slower than expected.
Looking ahead to the fourth quarter, Taiwan's economic performance will be affected by United States fiscal policy as well as the U.S. Federal Reserve's policy on its quantitative easing program, the TIER said.