Business sentiment among manufacturers weakens in February

Taipei, March 25 (CNA) Business sentiment in the local manufacturing sector weakened in February, when the long Lunar New Year holiday fell, due to seasonal effects, the Taiwan Institute of Economic Research (TIER) said Wednesday.

Data compiled by the TIER, one of Taiwan's leading think tanks, showed that the February composite index for the manufacturing sector, which gauges business sentiment among local manufacturers, fell 2.10 points from a month earlier to 96.41, ending a seven-month upward trend.

Gordon Sun (孫明德), director of the TIER's Economic Forecasting Center, told reporters that because there were fewer work days in February, manufacturers in Taiwan saw their exports and production affected.

In February, Taiwan's exports rose 20.60 percent from a year earlier compared with an increase of 69.90 percent in January. Manufacturing production fell 11.48 percent from a month earlier, although year-on-year growth still hit 19.64 percent.

Citing a February survey, the TIER said 9.7 percent of respondents in the sector thought their business improved in the month, down from 25.1 percent in a similar poll conducted in January, while 41.0 percent of them agreed their business deteriorated, up from 24.4 percent in the January poll.

The TIER said 39.6 percent of the respondents in February thought their business would improve over the next six months, up from 25.8 percent in January, while 17.5 percent of them said their business would deteriorate over the next six months, up from 16.5 percent in the January survey.

Sun said a larger number of manufacturers stayed upbeat about their business outlook over the next six months, indicating many of them expected the military conflicts in the Middle East would not last too long.

TIER President Chang Chien-yi (張建一) said the U.S.-Israel war against Iran has affected energy supplies worldwide and boosted international crude oil prices, which could push up inflation at home and abroad.

Chang said even if the war ends shortly, oil price is likely to hover around US$100 per barrel for some time due to already destroyed energy infrastructure in the Middle East. 

Sun said if the war ends at the end of March or in early April, the impact on the economy could be under control, but if the war continues beyond mid-April to maintain crude oil prices around US$140 per barrel, a recession could follow.

Meanwhile, the TIER's composite index for the service sector also fell, shedding 0.55 points from a month earlier to 94.55 in February, stopping a four-month rising streak as turnover on the local stock market fell to cut brokerages' income.

In addition, the TIER said the February composite index for the construction industry fell sharply by 4.11 points from a month earlier to 95.81, citing a fall in commercial and residential property transactions in Taiwan's six largest cities.