Taiwanese manufacturers expect their businesses to improve in the next six months despite lingering uncertainty, as customer inventories have largely returned to healthy levels, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The Taipei-based think tank arrived at its findings after polling more than 500 firms about their operations, profit margin and factory utilization next year.
A total of 52.9 percent of the respondents said they had positive views for the first half of next year, higher than 48.5 percent for the second half of this year.
Photo: Ritchie B. Tongo, EPA-EFE
Scores above 50 suggest expansion, while lower values indicate contraction. The profit margin registered 42.3, falling for the fifth straight time.
“The industry is in the process of bottom building and would embark on a recovery,” CIER president Yeh Chun-hsien (葉俊顯) told an economic forum in Taipei.
The improvement would come even though end-market demand has not yet returned to a “green light” state, which signals steady growth, Yeh said, adding that the industry has shown an even recovery, helped by short and rush orders.
The local manufacturing industry is about to come out of the woods, as technology brands have started to rebuild inventories following several quarters of stock adjustments, he said.
A surge in demand for artificial intelligence applications and solutions would also benefit local firms in global supply chains, he said.
As a result, hiring activity is to increase, as 52.1 percent of the respondents said they had plans to raise headcounts, the institute said.
The global economy would show favorable turns next year after the US Federal Reserve recently indicated that its monetary tightening cycle is likely over, National Development Council Deputy Minister Kao Shien-quey (高仙桂) said.
Global trade is expected to expand by 3.5 percent next year as the IMF recently predicted, which is favorable for Taiwan’s exports, Kao said.
The local semiconductor is also betting on a recovery of double-percentage points, she said.
External demand and private consumption would play the role of growth driver next year, whereas consumer spending has single-handedly underpinned GDP growth this year, she said.
The 12-month outlook printed 60.4 percent, meaning a majority of firms hold positive views, the survey showed.
At the same time, companies outside of manufacturing would continue to thrive as firms and people resume gatherings and recreational activities, CIER said.
While robust business showings might continue into next year, service providers have to cope with persistent labor shortages and cost hikes, Yeh said.
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