Business confidence last month declined among the manufacturing, service and real-estate sectors, affected by a spike in local COVID-19 infections that chilled consumer activity, a survey by Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) showed yesterday.
The sentiment gauge for the manufacturing industry weakened to 105.24, shedding 1.28 points from one month earlier, as suppliers of chemical and plastic products turned conservative about their business prospects, while makers of textile and leather products held a negative view, the survey found.
Companies that were optimistic about the next six months softened by 3.2 percentage points to 36.8 percent, while those that were pessimistic gained 5 percentage points to 12.8 percent, it showed.
Suppliers of electronics, machinery, steel and iron products remained upbeat, as they benefited from increased spending globally on information technology and civil engineering infrastructure, it said.
By contrast, a supply crunch of petrochemical products eased after US makers re-entered the field, putting pressure on selling prices, TIER said.
As a result, downstream buyers turned cautious about placing new orders amid concern over potential price declines, it said.
Overall, external demand has remained healthy, which is favorable to Taiwanese exports and the economy as a whole, with GDP forecast to grow by at least 5 percent this year if authorities could quickly bring the outbreak under control, TIER president Chang Chien-yi (張建一) said.
A GDP growth of 6 percent is still likely, although the chance is subsiding amid sluggish consumer activity after the government this week extended the nationwide level 3 COVID-19 alert to July 12, Chang said.
The decision has cast a shadow over expectations that consumer spending would start to recover next quarter, leaving exports alone to support the economy, Chang said.
The sentiment gauge for service firms slid 2.24 points to 98.25, down for a second month in a row, the Taipei-based think tank said.
Only warehousing and logistics service providers reported a pickup in business due to a surge in demand for online shopping and food delivery services, it said.
Wholesale companies and restaurants continued to hold bleak views about business prospects, but retailers, banks and insurance firms expect the situation to improve in the second half of this year, it said.
The sentiment for construction and real-estate sectors also took a hit, sliding 3.28 points to 102.73, TIER said.
Tight movement restrictions made house-hunting impossible, and seriously slowed public and private construction projects, it said.
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