Wed, Aug 29, 2007 - Page 12 News List

Business sentiment positive: TIER

BRIGHTER DAYS Despite loud complaints over rising prices, the consumer price index for the first seven months edged up only 0.47 percent from a year ago

By Jessie Ho  /  STAFF REPORTER

Local manufacturers and service providers were positive about the economic outlook with the coming of the high season, pushing business climate indices for both sectors to their highest in 10 months, a think tank survey showed.

Manufacturers who considered the economy good last month increased by 18.8 percent, and those who said the economy was bad decreased by 12.5 percent, a survey released by the Taiwan Institute of Economic Research (TIER, 台經院) yesterday showed.

The business climate index for the manufacturing industry for last month climbed by 3.18 to 119.24 points, the highest since October last year, the report showed.

For the next three months, 37.7 percent of those polled were optimistic about the economy, down from 42.8 percent in the previous survey, TIER said.

Meanwhile, 15 percent of the manufacturers were bearish on the economy, up from 10.7 percent, the institute said.

Fluctuation of raw material prices is one uncertainty that concerned the sector, said Chen Miao (陳淼), a research fellow at TIER.

Service providers, except for the banking industry which suffered from the US subprime mortgage fallout last month, were also positive. The business index for the sector was up by 1.09 to 118.97 points last month, the report said.

The improving job market and the easing credit abusing storm have and will stimulate private consumption, TIER president David Hong (洪德生) said.

The jobless rate last month was 4.03 percent, the lowest in July for the past seven years, government statistics showed. The average unemployment rate for the first seven months of the year was 3.88 percent, also the lowest in seven years.

Despite complaints over rising prices, the consumer price index (CPI) for the first seven months only rose 0.47 percent from a year ago, Chen said.

Most price hikes fell on food, which only accounts for 20 percent of the index and thus reflected little on the CPI, Chen said.

The fall in the prices of consumer electronics such as LCD TVs also helped offset the rise in food prices, Chen said.

As the economy is moving forward stably and consumer prices are steady, the central bank is likely to leave interest rates unchanged, Chen said.

The US Federal Reserve cut its discount rate by a half a percentage point this month due to the subprime storm, but Taiwan has no urgent need to follow suit, he said.

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