Business sentiment declined last month and might weaken further as the COVID-19 outbreak disrupts business operations while consumer activity declines, the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday.
The confidence gauge of local manufacturers shed 2.23 points from a month earlier to 94.16, ending two months of increases, the Taipei-based institute said.
Just 11.1 percent of firms reported an improvement in business, 16.4 percentage points lower than in December last year, while the percentage of companies reporting a decline soared from 24.5 to 48, the survey found.
More than 70 percent of firms involved in making leather products and electrical machinery reported a slowdown in business, it found.
“The data for this month could be worse after export orders posted a 12 percent contraction,” TIER president Chang Chien-yi (張建一) told a media briefing in Taipei.
He attributed the softening sentiment mainly to worries that the COVID-19 outbreak would lead to shortages of raw materials used in electronic components, even for firms that manufacture all their products in Taiwan.
Companies with the bulk of their capacity in China have had difficulties resolving labor shortages since an extended Lunar New Year holiday, Chang said.
Taiwanese firms also voiced concern that the outbreak would hurt demand if it cannot be contained in a timely fashion, he said.
Smartphone sales in China have plunged as people avoid going out and travel restrictions have added to the woes.
A separate survey found that the percentage of companies with a bullish outlook fell from 32.7 to 26, while the percentage of firms with a pessimistic outlook increased from 19.4 percent to 26.4.
The soft sentiment extended to service-focused companies, with their confidence reading shrinking 3.15 points to 88.63, it showed, with 90 percent of brokerages forecasting a slowdown.
Stores, hotels, restaurants and insurance firms also expect the outlook to remain bleak, it showed.
The business measure for real-estate firms fared the weakest, with an 8.41 point decline to 103.44, the lowest level since May last year.
Property transactions shrank 30.5 percent due to fewer working days and could remain depressed due to the outbreak, TIER said.
Property developers and construction firms would not cut prices, but instead push back the launch of new projects to deal with the slowdown, TIER researcher Arisa Liu (劉佩真) said.
Low interest rates, ample liquidity and capital repatriation would continue to lend support to the property market, Liu said.
However, “people looking for bargains might be disappointed,” she said.
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