Feb. Manufacturing Index Reads Stable Growth: TIER

February's manufacturing forecast index shone green, representing stable growth, reported the Taiwan Institute of Economic Research (TIER).

The outlook index changed from yellow-red, showing fast growth, to maintaining stable growth. The latest outlook indicates fewer working-days in February due to the Lunar New Year holidays, leading to lower indexes in February compared to January and weaker overall demand and raw ingredients.

TIER's report pointed out that the island's manufacturing index outlook was revised from 17.08 to 14.25, a 2.83-point decline compared to January. While it was a setback in terms of outlook signal, TIER reported February's statistics was still among the top performances since March 2017. In the two months of 2021, Taiwan's manufacturing score is still at an all-time high, compared to the same period in 2011, indicating the island's bolstering performance.

TIER uses a five-color coded system to describe the economic activity, with red indicating overheating, yellow-red showing fast growth, green representing stable growth, yellow-blue signaling sluggish growth, and blue reflecting contraction.

The institute's report pointed to 5G and high-performance computing as the most significant factors in bolstering the semiconductor industry. In turn, such demand also buoyed smartphones, laptops, tablets, and automotive electronics. Production demand for foundry models and memory chips subsequently increased as well. IC export and production growth continued a double-digit-upward trajectory, though due to the extended holidays last month, these indexes also declined compared to January.

Investors have expressed confidence amid the global economic rebound in terms of machinery equipment since the COVID-19 pandemic began. Outbound orders, exports, production numbers continue to grow YoY since February, though at a slightly lower scale compared to January. This signaled a change of red index signal in January, representing fast growth, to green, for the machinery equipment outlook index.

In terms of the future outlook, TIER reported that while quarantine lockdowns in the European region have been prolonged due to the worsening of the pandemic situation, governments have rolled out easing monetary policies, which the research center believes would lessen the impact. For instance, the U.S. had recently passed a stimulus package, which has helped revitalize the global economy. Remote-focused businesses and new technology applications continue to buoy industry growth as well.

TIER's survey reported optimistic outlooks across the electronics, steel, and chemical industry sectors, and in turn, would continue to provide growth momentum for the manufacturing industry.