Business sentiment among manufacturers improves in April

Taipei, May 25 (CNA) Business sentiment in the local manufacturing sector improved in April on the back of the current AI boom, the Taiwan Institute of Economic Research (TIER) said Monday.

Data compiled by TIER, one of the leading economic think tanks in Taiwan, showed the April composite index of the manufacturing sector, which gauges business sentiment among local manufacturers, rose 0.93 points from a month earlier to 97.14.

In addition, the TIER's composite index for the service sector also rose 0.54 from a month earlier to 96.73, with the composite index for the construction industry up 2.60 to 94.67, ending a three-month falling streak.

Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, told reporters that strong global demand for AI continued to boost Taiwan's tech exports, while business opportunities created by AI also helped the machinery industry as semiconductor firms were keen to expand.

Citing AMD Chair and CEO Lisa Su (蘇姿丰), Sun likened AI development to a baseball game, saying it is currently in the third inning and "we remain upbeat about its long-term development."

While military conflicts in the Middle East continued to boost raw material prices, buyers rushed to build up inventories to avoid impact from price hikes, Sun said.

Local manufacturers appear more upbeat about their business outlook over the next six months, he added.

According to a survey conducted in April, 28.7 percent of respondents in the manufacturing sector believed their business outlook would improve over the next six months, up from 27.0 percent in a similar poll conducted in March.

However, in the April survey, 11.5 percent said their business outlook will deteriorate over the next six months, also up from 11.1 percent in the March poll, TIER said.

As for the service sector, a booming stock market along with wage hikes during the AI era lent support to local consumption, Sun said.

"With the three indexes all recovering, I think the worst of the conflict in the Middle East is over," he added.

Despite the recovery in the composite index for the construction industry, TIER economist Liu Pei-chen (劉佩真) said many property investors stayed cautious as funds are largely parked in the stock market for higher returns.

Selective credit controls imposed by the central bank also prevented investors from pouring funds into the home market, while growing inflationary pressure has raised concerns that the central bank is unlikely to adopt loose monetary policies, which could squeeze funds in the property market, Liu said.

"I guess the central bank will turn neutral to hawkish toward interest rates," she added.