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Manufacturing, service firms' sentiment improves: survey

2016/03/25 15:31:50

Taipei, March 25 (CNA) The local manufacturing and service sectors showed an improvement in sentiment toward their business in February from a month earlier amid ample liquidity.

This came at a time when major central banks around the world have kept cutting interest rates, a survey released by the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) showed Friday.

The more upbeat mood also reflected a rebound staged by international crude oil prices, which is expected to boost the pricing power of raw material suppliers and raise their sales overseas, the survey indicates.

The TIER's manufacturing composite index for February rose 1.27 points from January to 92.26, while the service composite index also added 1.30 points from a month earlier to 86.07.

The sub-composite index for the local construction sector for February stopped a three-month losing streak to gain 1.47 points to 79.43, the TIER said.

TIER President Lin Chien-fu (林建甫) said that although falling global demand has continued to affect Taiwan's exports, major economies, such as Europe, Japan and China further relaxed their monetary policies to maintain high liquidity, which has relieved some local manufacturers and service firms.

A recovery in international crude oil prices amid optimism toward a possible production freeze by oil-producing countries has also raised confidence of the local manufacturing and service sectors to some extent, Lin said.

The TIER said that while Taiwan's outbound sales and industrial production remained haunted by weakening global demand, the magnitude of the decline has shown signs of narrowing, which also gave a boost to sentiment.

In February, Taiwan's export orders fell 7.4 percent from a year earlier, marking the 11th consecutive month of fall, but the decline was smaller than a 12.4 percent year-on-year decline seen in January.

Taiwan's industrial production for February fell 3.65 percent from a year earlier, marking the 10th consecutive month of decline, but the downturn was narrowed from a 5.99 percent year-on-year decrease recorded in January.

The TIER cited the February survey as saying that 40.4 percent of the respondents in the manufacturing sector thought the economy will improve over the next six months, up from 29.7 percent recorded in January, while 7.5 percent of them were downbeat about the economic climate, down from 16.2 percent recorded in January.

The think tank said that precision machinery firms appeared more upbeat than their counterparts in the manufacturing sector, while wholesale firms were more optimistic about the economy.

As for the higher sub-composite index for the construction sector, the TIER said that rising demand resulting from reconstruction after a strong earthquake that hit southern Taiwan in February served as a driver to better sentiment for construction firms and building material suppliers.

(By Tasi Yi-chu and Frances Huang)
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