Taipei--Business sentiment regarding the local manufacturing sector turned more cautious in February, with an index gauging the mood of local manufacturers falling for the second consecutive month, according to the results of a survey released Friday by the Taiwan Institute of Economic Research (TIER).
The index for the service sector for February reversed growth seen in January, also indicating caution embraced by service providers in the country, the TIER survey shows.
TIER, one of Taiwan's leading think tanks, said the manufacturing composite index for February, which is based on the survey, fell 1.88 points from a month earlier to 98.05.
The service composite index for February also fell 1.40 from a month earlier to 89.19 on slow season effects after the six-day Lunar New Year holiday, which ended on Feb. 1, the think tank said.
While Taiwan's industrial production repeatedly posted year-on-year growth in recent months, manufacturers remained cautious about their business outlook, as the TIER survey indicated.
In February, the local industrial production index grew 10.64 percent from a year earlier to 95.99, marking the seventh month in which the index had risen on a year-on-year basis, after a rise of 2.46 percent in January.
The TIER said that the caution reflected concerns over international crude oil prices amid worries over an output increase in the United States, which could depress prices of petrochemical prices in the world market.
In addition, a stronger Taiwan dollar, which has gained more than 5 percent against the U.S. dollar since the beginning of this year, has stirred up fears of foreign exchange losses suffered by local exporters in the first quarter of this year, the TIER added.
Gordon Sun (???), director of TIER's Economic Forecasting Center, said that although the local economy is on the road to recovery, the strength has not been solid enough. Sun said that Taiwan's economy needs more stimulus measures to move ahead, and that without new investment or consumption, the pace of recovery could slow.
Despite a move by the Directorate-General of Budget, Accounting and Statistics to raise its forecast for Taiwan's economic growth to 1.92 percent from 1.87 percent in February, the local central bank still decided to leave its key interest rates unchanged in a quarterly policymaking meeting Thursday.
While the index for the entire manufacturing sector fell for two months in a row, the sub-index for the property market rose for the third consecutive month in February, up 3.66 from a month earlier, as many property developers kicked off new construction projects in the month, the TIER said.
Commenting on the stock market, Sun said that the recent strong showing resulted from massive foreign fund inflows, and added that such high liquidity is expected to continue to support share prices for the rest of the current quarter. He forecast that the weighted index on the main board will challenge the 10,000-point mark soon.
On Friday, the weighted index closed down 0.28 percent at 9.902.98.
Source: Focus Taiwan News Channel