Sentiment among manufacturers improves slightly in April

Taipei, May 24 (CNA) Business sentiment in the local manufacturing sector improved slightly in April as the recovery of the global economy appeared to slow, affecting Taiwan's performance, the Taiwan Institute of Economic Research (TIER) said Friday.

The composite index, which gauges business sentiment among local manufacturers, rose 0.35 points from a month earlier to 98.67 in April, TIER cited data as saying.

In the service sector, a similar composite index grew 0.65 from a month earlier to 95.70 in April, marking the second consecutive month of growth, while another index assessing business sentiment in the construction industry rose sharply by 4.24 to 107.39, ending a two-month falling streak, the TIER data indicated.

At a news conference, TIER Economic Forecasting Center Director Gordon Sun (孫明德) said the slight increase in the April index for the local manufacturing sector demonstrated little change in sentiment from March as the global economy seems to move ahead slowly.

The United States and Europe saw their consumption expand but exports remained unstable, while Asia witnessed the opposite with an improved export performance and unsteady domestic consumption, Sun said.

In China, a supply glut due to over expansion also poses a challenge to Taiwan, Sun added.

For Taiwan, export momentum was boosted by a boom in artificial intelligence development," Sun said. "But, the momentum was uneven as old economy industries remained relatively weak."

Although the global economy has encountered an uphill battle in pursuing recovery, growth still continued despite moving at a slow pace, Sun said.

"Taiwan's trade structure has changed in recent years by generating large outbound sales from the U.S. market through exports of information and communications gadgets," Sun said. "I expect that trend to continue."

Citing a survey, TIER said 24.8 percent of respondents in the manufacturing sector said their business improved in April, down from 44.1 percent in a similar poll conducted in March.

In addition, 18.0 percent of respondents said their operations deteriorated in April, compared with 12.7 percent in the survey in March, TIER said.

Over the next six months, 34.6 percent of respondents said in the April survey that their business will improve, compared with 40.1 percent in March, while 10.0 percent said their operations will deteriorate, compared with 12.5 percent in March, TIER added.

In terms of the domestic demand-oriented sector, Sun said, the retail and auto industries as well as the stock market showed signs of booming in April, while the tourism industry was hurt by a decline in foreign arrivals after a 7.2 magnitude struck off the coast of Hualien, eastern Taiwan, on April 3.

Taiwan is expected to continue to feel the pinch from imported inflation in the wake of escalating geopolitical tensions, which will continue to boost energy prices, while the on-going drought could lead to congestion in the Panama Canal, one of the major channels for the shipping industry, and an increase in freight rates, Sun said.

Also at the news conference, Liu Pei-chen (劉佩真), a researcher at the TIER's Taiwan Industry Economics Database, said the significant rise in the composite index for the construction industry reflected a rise in the government budget for public work projects and hopes for rising demand for urban renewal after the temblor in Hualien.

In addition, with the Taiex, the benchmark weighted index on the Taiwan Stock Exchange topping the 20,000 point mark in most of the trading sessions in April, wealth effects pushed up home sales, helping the local construction industry.