Sentiment among manufacturers weakens in January

Taipei Amid escalating concerns over the spread of the COVID 19 coronavirus, business sentiment among manufacturers in Taiwan weakened in January, the Taiwan Institute of Economic Research (TIER) said Tuesday.

According to TIER, one of the country's leading economic think tanks, the reduced number of working days in January due to the 7 day Lunar New Year holiday also raised concerns over production and shipments.

Data compiled by TIER showed that the composite index for the manufacturing sector, which gauges business sentiment among manufacturers, fell 2.23 points from a month earlier to 94.16 in January.

In addition, the sub index for the local property sector dropped 8.41 percent from a month earlier to 95.03, while the composite index for the service sector also fell 3.15 percent to 88.63, the data indicated.

TIER said that while the United States and China signed a deal in mid January to deal with their trade dispute, uncertainty over the global economy remained in place due to the coronavirus epidemic that originated in the Chinese city of Wuhan.

In the manufacturing sector, TIER said, many companies were cautious about their business outlook over the next six months due to the virus.

According to a TIER survey conducted in January, some 26 percent of manufacturers predicted that the business climate will improve in the coming six months, compared with 32.7 percent in a similar poll in December, while 26.4 percent said it will weaken, up from 19.4 percent a month earlier.

TIER said that except for major steel makers in Taiwan, manufacturers generally held a downbeat attitude toward their businesses over the next six months.

In addition, 11.1 percent of the manufacturers polled in the survey said their businesses improved in January from a month earlier, down from 27.5 percent in a similar survey conducted in December, while 48.0 percent said their businesses deteriorated from a month earlier, up from 23.5 percent in the previous survey, TIER said.

TIER President Chang Chien yi said he expects that the impact on business sentiment resulting from coronavirus will be more apparent in February.

Commenting on the service sector, TIER said that despite a traditional buying spree during the Lunar New Year holiday, fears over COVID 19 prevented many consumers from spending, so retailers and food and beverage vendors appeared largely bearish about their business outlooks.

In addition, TIER said the insurance industry was also generally cautious toward the business climate.

In terms of the property market, the fall in the sub index came after January's reduced number of working days and the virus scare, TIER said.

However, Liu Pei chen a TIER economist, said she did not expect the local property market to see an adverse COVID 19 impact as big as that of the SARS epidemic of 2003, as the local market remained awash in liquidity and interest rates were low.

Liu said that since more and more Taiwanese companies with overseas operations have been returning home to invest, demand for industrial and commercial property is expected to remain solid and fend off the impact of the coronavirus.

The TIER survey showed that more than 40 percent of companies in the local property industry remained upbeat about market outlook over the next six months.

Source: Focus Taiwan News Channel