Business sentiment among manufactures slumped to the worst level in almost three decades last month and was also bleak in the service sector as economic downside risks heightened, a report showed yesterday.
The report by the Taiwan Institute of Economic Research (TIER, 台經院), which surveys different sectors monthly, found that the index of confidence for the manufacturing industry shed another 9.56 points to 78.24 points last month — the lowest since the institute initiated the poll in March 1979.
Just over 67 percent of manufacturers were bearish last month about their business prospects for the coming six months, up from 64.8 percent a month earlier, while firms with a neutral sentiment fell from 30.9 percent to 27.1 percent.
It said 5.8 percent of manufacturers were bullish, compared with 4.3 percent in October.
Chen Miao (陳淼), a TIER researcher who delivered the report, attributed the rise in bearish sentiment to deteriorating exports and domestic consumption.
Outbound shipments contracted 23.3 percent last month to US$167.8 billion.
“The gloom is unlikely to lighten in the near future, as the global economic downturn is expected to deepen and pose tougher challenges for the nation’s manufacturers and service providers in the months ahead,” Chen said.
Sentiment in the service sector was also bleak, with the confidence index dropping 4.87 points to 89.56 points last month, down from 94.43 points in October.
Chen said the survey showed that anticipation of consumer vouchers to be issued next month had yet to lift confidence in the service sector. The government will release the vouchers — worth NT$3,600 per eligible person — on Jan. 18, with the aim of raising next year’s GDP growth by at least 0.64 percentage points.
“The voucher plan is apparently not strong enough to offset the impact of recession on consumer spending,” Chen said.
The economist said he expected confidence to weaken further. Economic research institutes around the world have lowered GDP forecasts for many nations, including Taiwan, Chen said.