Improving US consumer sentiment and a big drawdown in wholesale inventories on Friday built on recent evidence that an economic recovery was picking up speed.
Shipping firm FedEx Corp added to the growing sense of economic recovery when it said profits would be higher than it had earlier expected, citing an improving economy and fuel prices.
The Reuters/University of Michigan Surveys of Consumers said the preliminary reading of its consumer confidence index for this month rose to 70.2, the highest since June, from 65.7 last month. This was above economists’ median expectation of a reading of 67.3, a Reuters poll showed.
SURPRISE
“It’s not really a surprise given the gains in stocks that we’ve seen and the data pointing more toward a recovery in hand,” said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.
Inventories at US wholesalers in July fell to their lowest level in nearly three years, declining for the 11th straight month after sharp drops in furniture and metals stocks, government data showed, suggesting consumer demand was reviving.
The US Commerce Department said total wholesale inventories dropped 1.4 percent to US$387.2 billion, the lowest level since September 2006, after a revised 2.1 percent decline in June. Economists had expected a 1.0 percent drop in July from June.
DEFICIT
The US government has pumped billions of dollars into the economy to help lift it from the worst downturn in decades at the same time as tax receipts have fallen considerably, leading to record deficits that have many worried about the country’s long-term fiscal health.
Last month’s budget deficit of US$111.40 billion, while far smaller than the US$152 billion gap forecast by economists, marked a record-matching 11 straight months of deficits.
A decline in outlays last month compared with a year earlier was partly due to calendar issues, which led some federal benefit payments to be shifted to July. Last month’s receipts also shrank, but at a slower pace than for the full fiscal year to date.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
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