Local business confidence last month weakened across all sectors, as high inflation at home and abroad slowed inventory digestion and consumer spending, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The decline in sentiment was most evident among manufacturers, with the climate gauge shedding 1.09 points to 85.04, dropping for the ninth straight month to its lowest point since May 2020, the Taipei-based institute said, citing its monthly survey.
Consumer price hikes, monetary tightening and geopolitical tensions are taking a toll on global demand for tech and non-tech products, explaining why chemical product exports tumbled 10 percent last month, with 60 percent of local suppliers feeling the squeeze, TIER said.
Photo: Ritchie B. Tongo, EPA-EFE
Sentiment remained conservative, although demand for electronics used in vehicles and new smartphones held firm, the institute found.
As a result, only 12.1 percent of local manufacturers had a positive view about their business prospects for the coming six months, down from 15.2 percent a month earlier, it said.
The number of firms with negative outlooks rose 2.1 percentage points to 43 percent, TIER said, adding that conservative outlooks were common among manufacturers in the chemical, metal and machinery sectors.
Firms in the service sector reported a slowdown in business, with the confidence measure falling 2.03 points to 94.02, after a seasonal uptick linked to the summer vacation came to an end, it said.
Last month, most hotels and restaurants said that business was flat, while proprietary traders and securities firms took a hard hit from major TAIEX corrections, the institute said.
Looking forward, a recovery in domestic demand seems questionable, despite the reopening of Taiwan’s borders, it said.
As countries in Asia lift COVID-19 restrictions, Taiwanese are likely to prefer trips overseas, which could reduce domestic tourism spending, TIER said.
People could also become cautious about spending due to consumer price hikes and investment losses, it said.
Consequently, more than 80 percent of retailers are neutral about their business outlook for the coming six months, the institute said.
Restaurants are looking to benefit from year-end feasts and gatherings, as well as the arrival of foreign tourists, TIER said.
However, labor shortages would slow the pace of recovery, it added.
The business confidence measure for the construction industry dropped 2.55 points to 90.72, it said, adding that civil engineering firms are ramping up construction of public works projects before the end of the year, but property developers are slowing the pace, as sales rates have been disappointing amid economic uncertainty and construction costs remain high.
The construction sector expects business to be flat, based on government budgets and the economy changing gears, it said.
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