The business climate monitor for local manufacturing in February signaled “blue” for a fourth consecutive month, reflecting declines in the petrochemicals, plastic, metal and electronics sectors, while auto components held firm, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The business composite index edged up 0.85 points to 10.49, stuck in a recessionary state, as selling prices shed another 0.29 points on the back of firms cutting prices to secure orders, while the operating environment, cost, demand and input showed little improvement, the Taipei-based think tank said.
TIER uses a five-color spectrum to capture the industry’s movements, with “red” indicating a boom, “green” suggesting a steady state and “blue” signifying a downturn. Dual colors indicate a transition to a better or worse condition.
Photo: Ann Wang, Reuters
China’s reopening gave local firms a breather, but with end-market demand remaining soft in the US and Europe, inventory adjustments continued, hampering local manufacturers’ willingness to buy and prepare materials used in production, the institute said.
Against this backdrop, the ratio of companies whose business contracted dropped from 73.52 percent in January to 43.34 percent in February, while companies whose business was flat increased from 3.96 percent to 13.1 percent, it said.
Only 1.46 percent of companies reported that business increased and none experienced a boom, it added.
Textile and paper product makers reported a decline in business, as brand customers stuck to cautious inventory management and refrained from placing orders, it said.
Petrochemical suppliers found support in selling prices after local firms reduced capacity by conducting annual maintenance, it said.
Nevertheless, the entry of new competitors and slack global demand translated into a double-digit percentage decline in orders, it said.
Metal product suppliers fared slightly better, but remained weak overall, as downstream customers prioritized digestion of inventories, such as steel, it said.
The conservative business outlook weighed on machinery equipment providers, although some benefited from technology upgrades and capacity expansion by local semiconductor firms, it said.
The business monitor flashed “yellow-blue” for local electronics firms, as servers and networking equipment picked up due to demand from China, the institute said, adding that it did not see a recovery in demand for flat panels, computers and peripheral products.
Makers of transportation tools bucked the downtrend and reported steady business, thanks to the release of new vehicle models and an easing of the chip supply crunch, it said.
As a result, the number of new car license plates spiked 35.18 percent in January to 32,800 in February, it said.
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