Taiwanese companies in several sectors last month turned less optimistic about their business prospects, as major trade partners fared worse than expected in economic showing, a survey by the Taiwan Institute of Economic Research (TIER, 台經院) showed yesterday.
The business climate gauge for the manufacturing industry slipped to 94.27 last month from 95.75 in October, down for four months running as falling crude oil prices dent earnings for firms in the plastic industry.
“Firms involved in oil-linked businesses hesitate to replace orders these days for fear that crude costs might drop lower and make purchases now seem rather expensive later,” Gordon Sun (孫明德), director of TIER’s economic forecasting center, told reporters.
Consequently, only 11.7 percent of manufacturers were upbeat about their businesses last month, down 7.4 percentage points from October, while firms with negative views gained 5.5 percentage points to 36.2 percent, the survey indicated.
Manufacturers expressed more confidence when talking about the business outlook for the next six months.
About 27.5 percent of firms express optimism about the business landscape in the coming six months, an increase of 10.5 percentage points from October, the survey said, adding that firms with downbeat views declined from 23.8 percent to 14.7 percent.
The sharp decline in crude oil prices translates into lower productions costs for most local manufacturers, giving them incentives to raise wages for employees, Sun said.
However, firms engaged in providing energy from alternative sources might see their competitive edge weakening, the economist said.
The business indicator for the service industry dipped for the fourth consecutive month to 93.89 last month, compared with a revised reading of 94.89 in October, dragged down by sluggish outlook among retailers, the survey showed.
Firms in the transportation and logistics sectors are more positive about business prospects, thanks to lower fuel costs, the survey said.
The Taipei-based think tank expects oil prices to remain low next year, boding well for firms that rely heavily on oil products, Sun said.
The business climate reading for the construction industry pared 4.64 points to 87.68 last month, down for three months in a row, as builders and developers had difficulty finding buyers, the survey said.
The government’s plans to introduce separate income taxes on property gains cast a shadow on the market, even though uncertainty over the nine-in-one elections came to an end last month, it said.
The tax issue and likely interest rate hikes next year might continue to weigh on property transactions, the survey said.
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