The service sector saw a slight uptick as confidence grew that the COVID-19 outbreak would soon lose momentum, a monthly survey showed
By Crystal Hsu / Staff reporter
The sentiment gauge for manufacturers last month shed 2.21 points to 94.79, the lowest in nearly two years, as global inflation and monetary tightening took a toll on demand for technology products, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
However, service providers, builders and property brokers posted a slight uptick as confidence rose that the COVID-19 outbreak would soon lose momentum and things would return to normal, the Taipei-based institute’s monthly survey showed.
Manufacturing firms, which play a key role in driving the nation’s exports, expect business to soften in the coming six months amid concerns that inflationary pressure would linger and global monetary tightening would gain speed, it said.
Economic uncertainty has played havoc with demand for technology gadgets, affecting local firms and their international supply chains.
US electric vehicle maker Tesla Inc has said it would cut regular workers by 10 percent and increase hourly staffers after CEO Elon Musk voiced unease about the economy.
South Korea’s Samsung Electronics has told suppliers to either delay or reduce shipments of components and parts due to global inflation and swelling inventories.
Taiwanese manufacturers holding a positive outlook dropped 2.3 percentage points to 25 percent, while those with a bleak view gained 9.4 percentage points to 28.9 percent, TIER found.
Local flat-panel supplier AUO Corp (友達光電), for one, has announced that it would not be able to meet its earnings target for the current quarter as customers cut back on purchases to digest inventories.
Manufacturers of auto parts and components are relatively upbeat about order prospects, while makers of plastics, chemicals, steel and textile products have turned more pessimistic, the survey showed.
The confidence reading for companies in the service sector came in at 95.26, up 0.6 percentage points from one month earlier, as the industry has likely bottomed out, it said.
Wholesale firms are divided about the business landscape moving forward, but retailers, restaurants and financial institutions are expecting an uptick after going through rough times, TIER said.
The government is to introduce travel subsides for domestic tourism on July 15, when COVID-19 cases are expected to have fallen significantly.
The pickup in confidence is more evident among companies involved in civil engineering projects, property development and real estate, with the gauge rising 2.04 percentage points to 98.14, it said.
The property market might come out of the woods next quarter when people feel more comfortable about resuming house hunting, TIER said, adding that the COVID-19 outbreak had delayed, but not eliminated demand for housing.
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