Manufacturing sector’s business sentiment weakens

The TIER said falling demand contributed to ongoing inventory adjustments in the global semiconductor sector, dampening market sentiment, and a decline in product prices for electronics and machinery makers also left local exporters nervous. (NOwnews)

TAIPEI (CNA) — Business confidence among Taiwanese manufacturers weakened in May as the trade standoff between the United States and China escalated, according to the latest survey by the Taiwan Institute of Economic Research (TIER).

TIER President Chang Chien-yi (張建一) said on June 26 the rising trade tensions between the two countries affected global demand and put downward pressure on Taiwan’s exports, which left export-oriented manufacturers less confident about their business prospects.

The TIER, one of the country’s leading economic think tanks, said the May composite index for the manufacturing sector fell 0.15 points from a month earlier to 94.44.

It was the second consecutive month that the index, which measures business sentiment, posted a month-on-month decline.

The fall in the May index came after Taiwan reported year-on-year falls in exports and export orders for a seventh consecutive month in May.

Exports were down 4.8 percent from a year earlier, while export orders were down 5.8 percent during the month.

The TIER said falling demand contributed to ongoing inventory adjustments in the global semiconductor sector, dampening market sentiment, and a decline in product prices for electronics and machinery makers also left local exporters nervous.

The TIER survey found that 25.1 percent of polled manufacturers said the business climate improved in May, up from 21.6 percent in a similar survey conducted in April, while 32.8 percent thought the business climate worsened in May, up from 26.2 percent in the April poll.

The May poll also found that 17.7 percent of the respondents said they expected the business climate to improve over the next six months, down from 30.9 percent in April, while 26.8 percent said they expected the business climate to deteriorate over the next six months, up from 21.2 percent in the April poll, the TIER said.

The sub-index for the property sector, however, rose 3.30 from a month earlier to 93.96 in May as the local property market saw an increase in the buying of homes, the TIER said.

Also, the composite index for the local service sector rose 1.52 from a month earlier to 98.22 in May as local life insurers reported foreign exchange gains and the food and beverage industry generated higher sales during the month, the think tank said.

By Pan Tzu-yu and Frances Huang