Taipei, Aug. 26 (CNA) Amid concerns about downside risks to the global economy, business sentiment in the local manufacturing sector weakened further in July to bottom out in addition to two years, according to the Taiwan Institute of Economic Research (TIER).
Data compiled by TIER, one of Taiwan’s leading think tanks, showed the composite index assessing the business climate of the manufacturing sector for July fell 1.09 points from the previous month to 87, 91, the lowest level since May 2020, when the index was at 86.03.
The July figure also marked the seventh consecutive month that the composite index fell, the data showed.
However, also in July, the services sector composite index ended a three-month streak of declines by rising 2.55 from the previous month to 96.41 on the back of a recovery in consumption. amid easing COVID-19 concerns as well as subsidies introduced. by the government to stimulate the tourism industry.
In addition, the composite index measuring the business climate in the construction sector rose by 3.84 from the previous month to 96.74 in July, as the sector accelerated its pace of new housing supply. before the high season at the end of the year. Additionally, TIER said an increase in public works has also bolstered the industry.
TIER Chairman Chang Chien-yi (張建一) said inflationary pressure had hit global demand and the global economy after a spike in commodity prices prompted the world’s major central banks to tighten monetary policies.
Chang said demand for consumer electronics, such as smartphones and PCs, had weakened amid rising inflation and many international brands were adjusting their inventories, leading to lower capacity utilization in the electronics industry in Taiwan.
Citing a survey, TIER said 16.8% of manufacturers surveyed said their business had improved in July, compared to 20.5% in a similar survey in June, while 43.8% said said their activity deteriorated in July, down from 42.7% in the June survey. .
TIER said the chemicals, steel, electronics and machinery industries looked more optimistic in July.
Over the next six months, according to TIER, 20.1% of respondents said they expected their business to improve in the July survey, compared to 18.5% in the June survey, while 39.4% said they expected their business to deteriorate, compared to 36.4%. % in the June poll.
TIER said that with the exception of food industries and non-metallic minerals, the manufacturing sector appeared cautious about the next six months.
Liu Pei-chen (劉佩真), a researcher at TIER’s Taiwanese Industry Economics Database, said the semiconductor industry, which is a big part of the local economy, is facing inventory adjustments.
Liu said many buyers in the semiconductor industry have cut orders, raising alarm that the industry will have a worse second half than the first half of this year.
Commenting on the local property market, Mr Liu said there was little room for house prices to fall as property developers seemed reluctant to cut prices at the moment.
Rising construction costs caused by factors such as rising land prices and a labor shortage are also expected to help sustain home prices, he added.