Taipei, The local manufacturing sector's outlook on the business climate weakened in September as there was no sign that the trade disputes between the United States and China would be resolved anytime soon, according to Taiwan Institute of Economic Research (TIER).
TIER, one of the leading economic think tanks in the country, said the September composite index for the manufacturing sector fell 4.49 points from a month earlier to 93.76, the lowest level since February 2016 when it was 92.42.
The sub-index for the local property sector stopped a three-month rising steak, dropping 2.75 from a month earlier to 96.53 amid renewed pessimism toward the property market as developers anticipated higher interest rates, TIER said, citing one of its surveys.
The old economy industries, such as the machinery and petrochemical businesses, were more downbeat than the electronics industry as their cautious clients had cut orders due to the China-U.S. trade tensions, TIER said.
Sentiment in the high-tech sector remained little changed from a month earlier, as the third quarter was a peak season for electronics suppliers, the think tank said.
Citing a relatively high comparison base over the same period of last year in outbound sales, TIER said, many Taiwanese exports-oriented firms remained cautious toward export growth over the next six months.
The think tank said 11.6 percent of manufacturers in its survey said the business climate improved in September, compared with 22.1 percent in August, while 42.1 percent said the business climate had deteriorated, compared with 22.1 percent a month earlier.
Looking ahead to the next six months, 15.7 percent of the manufacturers said in September that the business climate would improve, up from 15 percent in August, while 30.20 percent projected a decline, compared with 26.1 percent in the August poll, according to TIER.
In the local service sector, the composite index for September also fell 2.38 from a month earlier to 95.62, the lowest since April when it was 95.01, TIER said.
The weakening sentiment in the local service sector was due to volatility in the local equity markets amid concerns over global trade issues, the think tank said.
A hike in U.S. interest rates, which prompted foreign investors to move their funds out of the region, was also a contributing factor to the downbeat outlook in the service sector, TIER said, forecasting that such factors will send more ripples through the stock market down the road.
Source: Focus Taiwan News Channel