Business sentiment in the manufacturing sector improved in November after falling for 10 consecutive months, as many manufacturers expect the U.S. Federal Reserve to slow its pace of interest rate hikes, the Taiwan Institute of Economic Research (TIER) said Monday.
The composite index gauging business sentiment in Taiwan’s manufacturing sector rose 0.87 percent from a month earlier to 84.79 in November, according to data released by TIER, one of Taiwan’s leading think tanks.
Aside from expectations of a less aggressive Fed, the improved sentiment also resulted from rising optimism among exporters in the sector over demand from the Association of Southeast Asian Nations (ASEAN) bloc and India and an economic recovery in China.
Gordon Sun (???), director of the TIER’s Economic Forecasting Center, cautioned, however, that despite the upswing in business sentiment in November, it will take two to three months to determine whether it is a trend.
“I’m hoping that the rise in November will not be a flash in the pan,” Sun said.
The TIER said more manufacturers were upbeat in November about their business prospects over the next six months than in a previous survey in October.
In the November poll, 20.9 percent of respondents agreed their business will improve over the next six months, up from 13.7 percent in October, while 33.9 percent of them thought their business will decline over the next six months, down from 38.4 percent in October.
The TIER said steel manufacturers were more optimistic about their businesses over the next six months, while the electronics and machinery sectors appeared more cautious.
As for the service sector, the composite index rose 0.31 percent from a month earlier to 91.21 in November, stopping a three-month streak of declines, according to the TIER.
The TIER said the improvement in the service sector was the result of a strong comeback by Taiwan’s stock market and improving private consumption due to easing concerns over COVID-19 infections.
In the construction sector, the composite index fell 0.24 from a month earlier to 85.60 in November, the lowest level in two and a half years and the fourth consecutive month of decline, according to the TIER.
Liu Pei-chen (???), a researcher at the TIER’s Taiwan Industry Economics Database, said weakness in the property market resulted from rate hikes by Taiwan’s central bank, which has increased key rates by 62.5 basis points since March, pushing up mortgage rates.
The Legislative Yuan has started to review an amendment to the Equalization of Land Rights Act, a move aimed at clamping down on speculative buying in the property market, which also dampened sentiment in the industry, Liu said.
She predicted that the domestic housing market will see a continued decline in transactions and a slight fall in prices over the next six months.
Source: Focus Taiwan News Channel