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Business sentiment among manufacturers improves for 4th straight month

03/25/2023 04:32 PM
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CNA photo March 24, 2023
CNA photo March 24, 2023

Taipei, March 25 (CNA) Business sentiment in the local manufacturing sector improved for the fourth consecutive month in February, according to the Taiwan Institute of Economic Research (TIER).

TIER's composite index gauging business sentiment in Taiwan's manufacturing sector rose 3.12 points from a month earlier to 91.19 in February, after a 1.68-point rise in January, marking a month-on-month increase for four months in a row, the think tank said.

Gordon Sun (孫明德), director of the TIER's Economic Forecasting Center, said that with China, the world's second-largest economy, easing its COVID-19 controls, this had pushed up global demand and prompted many enterprises to resume production, paving the way for a recovery in the old economy sector.

As for the tech sector, Sun said that inventory adjustments are expected to continue and a reversal could not be seen in the second quarter of this year or even in the second half of the year.

Judging from February's data, Sun said he expected clouds over the local manufacturing sector as a whole will start to move away in the second quarter and sunny skies will follow.

Commenting on the global semiconductor industry, Liu Pei-chen (劉佩真), a researcher at the TIER's Taiwan Industry Economics Database, said it was too early to determine how the industry would rebound in the second half of this year due to lingering uncertainty over the global economy.

Liu said the silver lining was that Taiwan's semiconductor firms could benefit from escalating tensions between the United States and China in the tech sector, which has seen many foreign buyers shift their orders from Beijing to Taipei.

Liu added that such effects could become more apparent after the second quarter.

Citing a survey, TIER said 30.1 percent of respondents in the local manufacturing sector said their business improved from a month earlier in February, up from 11.1 percent in a similar poll conducted in January, while 25.1 percent of them said their business deteriorated in February, down from 44.2 percent in the January poll.

TIER said chemical, steel and transportation tool suppliers appeared upbeat about their business in February.

As for the service sector, the composite index for February to gauge business sentiment rose 3.21 from a month earlier to 94.97, marking the second straight month of a month-on-month increase, TIER said.

Sun said despite the impact of inflation, a move for the government to distribute NT$6,000 (US$197) in cash payments drawn from last year's tax surplus is expected to encourage consumers here to spend and shore up the economic growth in the second and third quarters.

According to TIER, the composite index gauging business sentiment in the property industry rose 1.20 from a month earlier to 93.31 in February, reversing a 0.77 decline in January.

Liu said the local home market remained haunted by economic uncertainty, the government's policy to rein in home prices, a supply glut, an ongoing rate hike cycle by the central bank as well as political uncertainty ahead of the upcoming presidential election scheduled for January 2024.

She said transactions of commercial and residential property could shrink further down the road as market consolidation continues.

(By Pan Tzu-yu and Frances Huang)


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