Taiwanese companies have mixed views about their business prospects over the coming six months, as manufacturers experience flat business, the service sector takes a hit from artificial intelligence (AI) share corrections and construction firms benefit from public works projects, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The sentiment gauge for local manufacturers last month inched up 0.44 points to 91.92, but the Taipei-based think tank said it would be better to adopt a neutral interpretation of the reading given the insignificant pace of the uptick.
“The worst is over, but a concrete recovery remains elusive as rush orders are driving business improvement and firms wonder if such orders can last,” TIER economist Gordon Sun (孫明德) said.
Photo: Allen Wu, Taipei Times
Manufacturers with a positive outlook over next six months dropped 5.1 percentage points to 18.6 percent, while firms with a negative outlook increased 1.9 percentage points to 23.1 percent, the institute said, adding that makers of chemical, steel, metal and electric products were neutral.
Exports of information, communications and technology products are the only bright spot and the upturn would spread next to electronics, as the arrival of the high sales season would speed up inventory adjustments, Sun said.
However, recent US economic data and a noticeable advance in international oil prices have led to unease about an increase in inflation, he said.
The US Federal Reserve might raise interest rates again to tame inflation, a scenario that is unfavorable for the global economy and Taiwan’s exports, Sun said.
The confidence measure for local service providers declined 2.99 points to 97.26, ending three months of increases, the TIER survey found.
The retreat is most evident among securities houses and life insurance companies, as AI fever has subsided, taking a toll on interest in stock investment, Sun said.
Ongoing capital flight is raising concerns about the financial market’s outlook and making it more difficult to sell insurance policies, which are under pressure due to tightened regulations, he said.
Retailers and hospitality service providers continued to report robust demand, but a surge in overseas travel canceled out partial growth momentum, Sun said, adding that the pattern would hold stable.
The sentiment reading for construction firms and property brokers rallied 4.59 points to 103.36, rising for the third month in a row, TIER said.
Government agencies began construction on several public works projects and supplied earnings momentum for developers, TIER’s Taiwan Industry Economics Database researcher Arisa Liu (劉佩真) said.
The decline in housing transactions diminished because preferential lending terms for first-home buyers motivated young people, Liu said.
However, she said that the changes should not be equated to a turnaround in the property market, as housing unaffordability remains the No. 1 public complaint and policymakers are likely to avoid moves that might estrange voters.
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