Manufacturers' business sentiment improves on AI boom

Taipei, Aug. 25 (CNA) Business sentiment in the local manufacturing sector improved in July as many export-oriented companies continued to receive a boost from robust global demand for AI applications, the Taiwan Institute of Economic Research (TIER) said Tuesday.

Data compiled by TIER, one of the leading economic think tanks in Taiwan, showed the July composite index of the manufacturing sector, which gauges business sentiment among local manufacturers, rose 2.48 points from a month earlier to 101.09, a high in more than four years.

Meanwhile, the TIER's composite index for the service sector fell 1.29 from June to 98.20 in July, ending a four-month rising streak, while the composite index for the construction industry rose 2.96 to 110.55, marking the fourth straight month of growth, the data indicated.

TIER said Taiwanese tech firms continued to benefit from AI and high-performance computing development and also saw their clients build up inventories ahead of the debut of their new gadgets, with semiconductor suppliers as the major beneficiaries.

Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, said the global AI industry tended to unveil new products every 12 or 18 months, so Taiwan could continue to ride the waves of the current boom.

Although uncertainties over the Middle East remained, Sun said, the worst effects on the global energy market could be over. He said international crude oil prices and domestic consumer prices are expected to stabilize.

Citing a survey, TIER said 31.3 percent of respondents in the manufacturing sector thought their businesses improved in July, compared with 20.2 percent in a similar poll conducted in June, while 14.6 percent of them said their operations deteriorated in July, down from 24.8 percent in June.

Over the next six months, 29.7 percent of the respondents said their businesses will improve in the July survey, little changed from June, while 15.4 percent of them thought their operations will deteriorate in the July poll, up from 13.7 percent in June.

In the service sector, TIER said, business sentiment was hit by a plunge of 6.52 percent in the Taiex, the Taiwan Stock Exchange's benchmark index, in July amid global volatility caused by deleveraging,

The retail industry, however, witnessed sales growing in July as many shopping malls launched promotional campaigns to stimulate buying during the current summer vacation, TIER said.

In the construction industry, although an increase in costs, a labor shortage and a rise in building material prices posed challenges to property developers, TIER said, strong AI demand prompted tech firms to build new plants and offices and investment in public transportation projects boosted the industry's sentiment.