The business climate gauge for local manufacturers last month declined for the fourth consecutive month to its lowest level since February last year, indicating a slowdown in the pace of economic recovery, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The TIER Manufacturing Sentiment Index shed 2.27 points month-on-month to 95.61, TIER economist Gordon Sun (孫明德) said, adding that the current expansion cycle might have peaked in the fourth quarter of last year and will increasingly moderate each quarter this year.
Only 11.8 percent of manufacturers expressed positive views about their business last month, the survey showed, drastically lower than 47 percent in March.
Meanwhile, manufacturers expressing negative sentiment surged from 15.5 percent to 42.3 percent, the survey showed, as falling raw material prices dampened the business of local suppliers of steel, chemical and plastic products.
The results of the survey raised uncertainty over the nation’s export-oriented economy for the rest of the year, during which exports might continue to improve amid listless private consumption, Sun said.
Retail sales contracted 0.4 percent annually in the first four months of the year, despite ongoing rallies on the TAIEX, which this month closed above the 10,000-point mark for the first time in 17 years, he added.
“The contraction bucked the traditional seasonality, in which the first quarter is usually the high season for consumer spending due to year-end bonuses,” Sun said, adding that the wealth effect linked to stock rallies also failed to induce more spending.
The economist attributed the lackluster retail sales — a critical gauge of consumer spending — to the sharp decline in the number of Chinese tourists.
The number of Chinese tourists might slump to less than 2 million this year after a 50 percent fall in the first four months of the year, compared with 3.5 million for the whole of last year and 4 million in 2015, Sun said.
That would weigh on overall consumer spending, as 2 million tourist visits would generated NT$2 billion (US$66.5 million) in tourism revenue, a shortage too great to be made up by domestic tourists and those from elsewhere, he added.
The business climate reading for the service sector last month remained flat at 91.83, while the gauge for the construction industry shed 1.99 points to 87.94, the survey found.
A monthly decline in property transactions of 13 percent dimmed expectations of a market recovery, TIER senior analyst Arisa Liu (劉佩真) said.
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