Business confidence remains steady among local manufacturers: TIER

Business confidence last month remained mostly steady among local manufacturers and service providers, but declined for construction companies due to lingering holiday disruptions, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.

The business sentiment for the manufacturing industry rose to 98.18, an increase of 0.06 points from January and gaining for three consecutive months, the Taipeibased think tank said.

However, 11.7 percent of firms reported better performance last month, falling 19.8 percentage points from a month earlier, while 36.7 percent posted a decline in business, up 14.8 percentage points, TIER said, attributing the results to fewer working days due to the Lunar New Year holiday.

However, 50.2 percent of firms are looking at business improvements in the coming six months, a steep rise of 22.6 percentage points from one month earlier, with only 11.1 percent expecting things to worsen, falling from 19.8 percent one month earlier, TIER said.

Manufacturers of chemical, machinery equipment and electrical products are relatively positive, while suppliers of base metals hold flat views, it said.

The confidence gauge for service providers dropped 0.46 points to 92.72 last month, also due to the holiday effect, TIER said.

Firms in the hospitality, insurance and shipping sectors are slightly more upbeat about their business outlook, whereas retailers, banking institutes and securities houses expect flat showings ahead, it said.

TIER said that recent TAIEX rallies elevated the risks of profit-taking by foreign institutional players and caused some securities brokerages to turn cautious over the stock market’s prospects over the next six months.

The sentiment measure for construction companies and real-estate brokers weakened 2.82 points to 103.66 last month, ending three months of increases, TIER said, adding that fewer working days and labor shortages were to blame for the retreat.

The central bank’s latest interest rate hike, the first since the first quarter of last year, is not expected to cool down the property market and is unlikely to affect firsthome purchases as the government would absorb the extra borrowing costs, TIER said.

Government data showed that housing transactions in the first two months grew 40.1 percent from a year earlier in the six special municipalities, supported by first-home purchases to take advantage of interest subsidies the government introduced in August last year.