An increased number of manufacturers and service providers have become cautious about their business outlook for the second half on concerns that exports may fail to post a strong rebound in the third quarter, an industrial report released yesterday showed.
The Taiwan Institute of Economic Research (TIER, 台經院), which surveys different sectors monthly on their gauge of the business climate, said the number of pessimists rose to 27.8 percent last month, compared with 25.4 percent in June. Meanwhile, firms optimistic about their business prospects fell from 33.3 percent to 28.9 percent, the report said, adding that firms with a neutral sentiment increased from 41.3 percent to 43.3 percent.
TIER president David Hong (洪德生) attributed the trend to the global economic slowdown and falling demand for electronic and communication products from major trade partners, notably the US.
The climate indicator for the manufacturing sectors stood at 107.6 points last month, compared with 107.27 points a month earlier, the report said.
Though exports registered an 8 percent growth last month, a sizable number of manufacturers remained cautious on concerns that high fuel and raw material costs would lower their profit margins, Hong said.
Chen Miao (陳淼), a TIER researcher, said that inflationary pressures had prompted consumers to avoid spending, which was hurting the financial performance of service industries.
The climate index for the service sector stood at 106.49 points last month, compared with 113.76 points in June, the report said.
Wholesalers showed a 6.78 percent growth in business volume while retailers and restaurants suffered a decline of 3.81 percent and 0.81 percent, respectively, the report said.
Chen said the figures showed wholesalers had passed rising costs on to retailers and some in turn had transferred those costs to consumers.
Declining consumer confidence dealt a further blow to the real estate and financial sectors that have already had to bear losses from the US subprime mortgage crisis, Chen said.
The researcher said he considered it unnecessary for the central bank to raise interest rates as the measure had proven ineffective in curbing imported inflation.
But Chen said he believed the monetary regulator would hike its key interest rates again next month.
The TAIEX dropped 6.64 percent last month, while the local currency depreciated 0.041 to trade at NT$30.41 against the greenback, the report showed. Chen said a weak Taiwan dollar would be little help in boosting exports since exporters have kept their prices down to stay competitive.
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