Sat, Nov 25, 2006 - Page 12 News List

Business outlook turning conservative, survey says

GLOOM AND DOOM The report showed that only 30 percent of the companies interviewed thought the industry prognosis for the next six months was good

By Jackie Lin  /  STAFF REPORTER

A recent business sentiment survey of local manufacturers showed that many firms have become conservative in their outlook for the next six months, sparking broader concerns about the economy's performance in the near future.

The Taiwan Institute of Econo-mic Research (TIER, 台經院) manufacturing climate index slid to 117.37 points last month from 119.63 in September, according to a report released yesterday.

TIER attributed the decline to manufacturers' concern over fluctuations in raw material prices and squeezed margins.

"Manufacturers are concerned that their inability to shift additional input costs on to consumers will further squeeze their bottom line. Moreover, slight decreases in revenues have deepened their worries about the near future," TIER research fellow Chen Miao (陳淼) said at a press conference yesterday.

The TIER survey showed that only 30 percent of the manufacturers interviewed last month were optimistic about the industry outlook for the next six months, down from 35.5 percent in September.

Those who expected no change in the economic outlook rose from 45.7 percent to 50.7 percent, while 19.3 percent said they believed things will take a turn for the worse, up from 18.8 percent the previous month, Chen said, citing the survey.

On Thursday, the government said the nation's export orders last month -- an indicator of export shipments in the coming quarters -- had expanded 10.88 percent from the same month last year to NT$894.67 billion (US$27.29 billion), while private consumption grew only 0.4 percent in the last quarter from a year earlier, due to the continuing drag on confidence caused by the consumer bad loan problem.

service sector

TIER yesterday also released its service climate index, saying the index last month fell to a new five-year low of 109.15, down by 4.82 points in September.

Chen said the service sector is turning more cautious as the impact of the credit and cash card bad debt crisis lingers on, which has in turn weakened consumption spending and left retailers little room to hike prices while costs have edged up, he added.

Commenting on the performance of the local economy, TIER president David Hong (洪德生) said incentives from weakening crude oil prices and a bullish international stock market were somewhat offset by uncertain developments in domestic politics.

Strong exports in electronics, optical and electric products as well as steel and machinery last month drove exports up by 5.6 percent to NT$651.77 billion (US$19.85 billion) from a year ago, the Ministry of Finance reported earlier this month.

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