Taiwanese companies had mixed feelings about their business outlook last month, with manufacturers gaining optimism, but firms in the service and construction sectors growing more cautious due to policy uncertainty, a survey by the Taiwan Institute of Economic Research (TIER, 台經院) showed yesterday.
The overall sentiment might show an improvement this month, as the ongoing rally on the local stock exchange should encourage securities houses, which were the main drag on the sentiment reading for the service industry last month amid unease over Greece’s debt crisis.
The business climate gauge for the manufacturing industry rose to 99.37 last month, up 1.94 percentage points from a revised 97.43 in December last year, the Taipei-based think tank said after conducting a monthly survey.
“Manufacturers are looking at a business upturn going forward, despite lackluster sales this quarter due to a slow season,” TIER economic forecasting center director Gordon Sun (孫明德) told a news conference.
A total of 40.5 percent of manufacturers expect business to improve in the coming six months, compared with 33.4 percent in the previous month, the survey found, as garment and plastic product makers expressed more confidence.
Manufacturers with bleak views also picked up, from 11.8 percent to 12.7 percent, but the pace was much milder, the survey said.
Experience, instead of order visibility, accounts for the sentiment change, while developments abroad lent further support, Sun said.
The US recovery continued, Europe’s economy fared better and Japan’s recession slackened, the economist said.
GDP growth proved stronger at home last quarter as well, and it is believed that the momentum is likely to extend well into this year, the economist said, thanks mainly to cheaper crude prices.
Cheaper crude prices suggest better terms of trade for local firms, driving the statistics authority to raise its growth forecast to 3.78 percent for this year from the previous estimate of 3.5 percent.
The business sentiment reading for service sectors dropped to 95.91 last month, from 96.67 in the prior month, the survey said.
Sluggish stock transactions raised doubt among securities houses over their business outlook, Sun said, as Greece’s debt and the Lunar New Year holiday sidelined institutional players.
The sentiment should turn around after Greece secured a four-month bailout and investors are rebuilding positions, Sun said.
However, uncertainty would continue to weigh on the construction industry, as legislators remain divided over property tax plans.
The sector’s business gauge weakened to 78.81, down for five months running, after the Ministry of Finance proposed a 17 percent flat capital gains tax on property transactions. The rate would rise to 30 percent for foreign investors and houses sold within two years of purchase.
The draft would have difficulty passing the legislature, as some critics say it is overly lenient and others think it is too strict, TIER property researcher Arisa Liu (劉佩真) said.
“Buyers will adopt a wait-and-see attitude until the issue is settled,” she said.
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