Business climate index up in poll

A business climate index for manufacturers rose last month while the reading for the service industry dipped, a think tank survey released yesterday showed, painting a mixed picture of the nation's economic health.

Local manufacturers' confidence last month rose to a three-year high, despite the uncertainties of raw material price fluctuations, the Taiwan Institute of Economic Research (TIER, 台經院) said in a report.

FEELING GOOD

The business climate index for the manufacturing industry for last month climbed by 2.29 to 121.5 points, the highest figure since August 2004, the institute's tallies showed.

The Taipei-based institute attributed manufacturers' optimism about business prospects to two reasons: the increasing demand for Taiwanese goods in the nation's major export markets and the approach of high season for their products.

Based on the institute's survey, manufacturers who viewed the economy optimistically increased by 2.8 percent last month, while those who believed the economy was worsening decreased by 0.6 percent.

On the economic outlook for the next six months, 38.6 percent of manufacturers said that they were optimistic, up from 34.7 percent when the same survey was conducted in July, the report said.

PESSIMISTS

About 19.6 percent of those polled said they were pessimistic about the economy, up from 16.9 percent in the previous month, while 41.9 percent believed the economy would neither improve nor worsen during the next six months, down from 48.4 percent, it said.

Yesterday's report, however, showed the business climate index for the service sector fell by 2.99 points to 114.82 points last month.

TIER said in the report that the service sector had seen a downward adjustment in business sentiment last month, as local brokerage houses were hit by stock market volatility in the wake of the US subprime mortgage crisis, and restaurants and the leisure industry were affected by typhoons and a slowdown in the nation's tourism sector.

The institute said that private consumption should maintain steady growth in the months ahead, given an eased unsecured consumer loan crisis, and improvements in both price and employment fronts.

With consumer prices under control, institute president David Hong (洪德生) said in the report that the nation's interest rates would stabilize in the short term, after the central bank raised its benchmark rates last week.

The raise marked the 13th consecutive rate hike since October 2004.

As for the NT dollar, Hong said the local currency would remain within a narrow trading range against the US dollar. He did not give a specific range, however.