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Little change to manufacturers' business sentiment in October

11/24/2023 04:35 PM
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CNA file photo
CNA file photo

Taipei, Nov. 24 (CNA) Business sentiment among manufacturers in Taiwan was little changed in October, with the Taiwan Institute of Economic Research (TIER) saying on Friday that the worst for the export-oriented manufacturing sector was over and that the situation was set to improve.

Data compiled by the TIER, one of Taiwan's leading economic think tanks, showed the composite index, which gauges business sentiment, fell by 0.38 points in the manufacturing sector from a month earlier to 93.71 in October.

Speaking at a news conference, TIER President Chang Chien-yi (張建一) said the small month-on-month decline in the index indicated the manufacturing sector had stabilized, but that the sector was in the midst of a U-shaped recovery, which meant an immediate rebound was unlikely.

TIER said Taiwan's exports fell by 4.5 percent year-on-year, due to weakening global demand, after a brief 3.4 percent rebound in September, but noted that emerging technologies, such as high-performance computing devices, had helped to cushion the extent of the October fall.

According to TIER, the global economy remained haunted by uncertainties such as escalating trade tensions between the United States and China, and geopolitical unease, which had in turn affected the performance of the manufacturing sector.

Citing a survey conducted in October, the think tank said 16.3 percent of respondents in the local manufacturing sector agreed their operations had improved in October, down from 16.8 percent in a similar poll in September, while 35.1 percent said business deteriorated in October, compared with 38.2 percent in September.

Regarding future sentiments, the survey found that 27.8 percent of respondents forecast that operations will improve in the next six months, up from 18.4 percent in the September poll, while 21.1 percent said their business performance had deteriorated in October, down from 25.9 percent in the survey a month earlier, TIER said.

As for the service sector, the composite index gauging business sentiment rose 0.05 points from a month earlier to 92.25 in October, following solid spending in food and beverage establishments during the Oct. 10 National Day holiday, and strong buying during retailers' anniversary promotion campaigns, TIER said.

In the construction industry, the composite index trended lower by 1.92 points from a month earlier to 99.27 in October, with the TIER attributing the decline to a fall in the completion of projects.

Chang said how the current U-shaped recovery pans out will depend on inflation and interest rates, adding that he expects high interest rates across the world will remain for a while, which could affect demand.

Also at the news conference, Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, said the U.S. and China, the two largest economies in the world, had not performed well, and this had led other economies to feel the pinch.

Sun said high interest rates are expected to impact private spending in the U.S., while the weakness in China's property market could affect the country's growth and lead to lower consumption.

(By Pan Tzu-yu and Frances Huang)

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