Manufacturing contraction continues for second month

• The monitoring indicator for Taiwan’s overall manufacturing industry in Dec 22 flashed a “blue” light for the second straight month signaling contraction, due to manufacturing inventory reduction and sluggish global demand.
• The monthly composite index for the local manufacturing sector, which gauges the sector’s fundamentals, fell by 0.24 points to 9.48 points in Dec 22, the lowest level since Feb 20, according to the TIER, one of Taiwan’s leading economic think tanks.
• The downturn comes at a time when global economic growth is forecast to decelerate sharply due to high inflation, volatile financial markets and tightening monetary policy by major central banks around the world, which have dented end-user demand and pushed down the indicators for exports, industrial production and export orders, while affecting demand and pricing, TIER said.
• However, China’s relaxation of many COVID-19 restrictions in Dec 22 has made local manufacturers more optimistic about the business outlook over the next six months, it added.
• As a result, among the five factors that made up the Dec 22 composite index, the sub-index for the general business climate moved higher by the most, 0.15, from a month earlier.
• Meanwhile, the sub-indexes for purchases of raw materials and costs rose by 0.05 and 0.03, respectively, TIER said.
• Bucking the upturn, the sub-indexes on demand and prices moved lower by 0.24, and 0.23, respectively, in Dec 22, compared to a month earlier, TIER added.

External Link : https://focustaiwan.tw/business/202302060013