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TIER survey reveals mixed sentiment

The Taiwan Institute for Economic Research (TIER, 台經院) said yesterday its business climate survey revealed mixed sentiment among manufacturers and service providers for the next six months.

A total of 36.4 percent of respondents expressed optimism about the next six months, up from 30.8 percent the previous month. However, pessimists also increased from 15.4 percent to 25.8 percent in the same period.

"Business sentiment is largely optimistic, but some respondents expressed concerns over a possible weakening of market demand for consumer electronics products as a result of a slowdown in the US economy this year," said Chen Miao (陳淼), an associate research fellow at the Taipei-based financial think tank.

So far there is no sign that global economies are "decoupling" from the US economy, which has been affected by the subprime mortgage crisis, he said.

Although investment has declined significantly, consumption in the private sector remains stable, Chen said. However, he said the effect of a decline in consumer confidence and a deteriorating job market in the US remains to be seen.

TIER predicts that the NT dollar will average NT$32.08 against the greenback this year, Chen said, adding that it was normal for the local currency to rise above the average in the first quarter as a result of seasonal demand.

Nevertheless, Chen said, “judging from the rising unemployment rate and a lack of improvement in trade deficits, the downward trend of the US dollar is [noticeable].”

TIER's January business climate index for the manufacturing sector declined 0.93 points from the previous month to 105.85.

The same index for the service sector was 113.01, up 0.88 points from 112.21 the previous month.

The TIER survey is conducted at the beginning of each month and polls businesspeople about the month just ended and their expectations for the next six months.
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