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Manufacturing sector sentiment weakens in April

2018/05/25 17:09:15

Taipei, May 25 (CNA) Business sentiment in the local manufacturing sector turned weaker in April with an index gauging the mood of manufacturers falling in the wake of slow season effects in the month, the Taiwan Institute of Economic Research (TIER) said Friday.

TIER, one of the leading think tanks in the country said, the April composite index for the manufacturing sector fell 1.70 points from a month earlier to 98.32.

Speaking at a news conference, TIER President Lin Chien-fu (林建甫) said slow season effects impacted the sales of electronics manufacturers, while falling demand for smartphones worldwide and a drop in the number of working days in the month, as a result of the Tomb Sweeping Festival holiday, also resulted in lower production in the sector.

As a result, Lin said the business outlook of the local manufacturing sector turned more cautious in April, which dragged down the composite index for the month.

TIER said 28.7 percent of manufacturers polled in a TIER survey said the business climate improved in April, down from 49.8 percent in a similar poll in March, while 27.4 percent said the business climate deteriorated, up from 10.3 percent in the March poll.

The sub-index for the local property development sector also fell 2.84 from a month earlier to 95.22, marking the third consecutive month the sub-index had moved lower, TIER said.

Liu Pei-chen (劉佩真), a research fellow at TIER, said the fall in the sub-index for the property development sector came after transactions of residential and commercial property in the six largest cities in Taiwan -- Taipei, New Taipei, Taoyuan, Taichung, Tainan and Kaohsiung -- fell almost 20 percent from March to April.

The fall in housing transactions prompted property developers to turn more cautious about the market in April, and the fall in home, shop and office sales resulted from uncertainty caused by the upcoming mayoral and county magistrate elections scheduled for late 2018, Liu said.

In addition, TIER said the local property development industry has also been impacted by rising fears over a possible interest rate hike by the central bank in the second half of the year as the market expects the bank to tighten monetary policy at a time of an economic recovery.

Bucking the downtrend in the manufacturing sector, the composite index for the local service sector moved higher by 0.45 points from a month earlier to 95.00, TIER said.

The think tank said that improving business sentiment in the local service sector largely reflected an increase in retail sales as the Tomb Sweeping Festival holiday in April and Mother's Day, which fell in May, boosted consumption.

However, with the fall in local equity prices and a fall of 2.4 percent on the weighted index on the Taiwan Stock Exchange in April, the financial sector was more cautious than the service sector in the month, TIER said.

(By Tsai Yi-chu and Frances Huang)
Enditem/AW