Manufacturers positive on near-term outlook

With exports continuing to gather momentum in the first two months of the year, manufacturers expressed greater confidence in the economy over the near term, according to a report released by the Taiwan Institute of Economic Research (TIER, 台經院) yesterday.

Among the respondents polled by the TIER, 57.4 percent said the economy would be in better shape for the next six months, up from 44.1 percent in January. Only 7.3 percent said the economy would get worse, down from 12.3 percent in the previous survey.

The remaining 35.3 percent said the situation would remain unchanged.

The results helped push the manufacturing climate index up to 105.32 points last month, the first rise in four months, Chen Miao (陳淼), a researcher at TIER, said at a press briefing.

As overseas trade for optical instruments, electronic parts and machinery continued to increase, exports in January and last month climbed 14 percent from a year earlier to US$32.31 billion, Chen said, citing figures provided by the Ministry of Finance.

Export orders also posted annual growth of 25.13 percent last month to US$20.26 billion, meaning export momentum in the first quarter remained strong, Chen said.

The services sector had a gloomier outlook given various negative factors, including shrinking real salaries and the consumer bad-loan problem, which was likely to dent private consumption, said Yang Chia-yen (楊家彥), a deputy director of TIER's research division.

The services sector's climate index decreased from 126.47 points in January to 125.11 last month, the report said.

The Council for Economic Planning and Development estimated late last year that debts accumulated from credit and cash-advance cards would trim consumption by NT$20 billion (US$614 million) this year, which would drag down the nation's economic growth by 0.15 percentage points.

Retailers have felt the pinch over the past two months, Richard Huang (黃正傑), the institute's research manager said.

Department stores and convenience stores, the biggest contributors to the retail sector, reported lower sales last month. Department store sales fell 20 percent while convenience stores reported a 10 percent decline from a year ago.

Shrinking turnover was a result of the fewer working days recorded last month because of the Lunar New Year holiday, as well as lender efforts to start tightening credit, Huang said.

The institute remained bullish on the growth of private consumption this year, saying it would be stable, bolstered by improved employment figures.