Taipei-Business sentiment toward the local manufacturing and service sectors has weakened, with two indexes gauging the mood of company owners in the two sectors falling in October, according to the Taiwan Institute of Economic Research (TIER).
TIER, one of the leading think tanks in Taiwan, said while the island's export orders reported year-on-year growth for the 15th consecutive month in October on the back of solid global demand, the effects of a peak season for high-tech gadgets have shown signs of fading, which have made a lot of manufacturers wary.
As a result, the manufacturing composite index for October fell 0.97 points from a month earlier to 100.69, marking the second consecutive month it has dropped, the think tank said.
According to data compiled by TIER, a month-on-month fall in October even topped a drop of 0.50 points seen in September.
The local service sector felt the pinch of falling turnover on the equity market and decreasing sales generated by life insurers so an increased number of securities and insurance firms have turned cautious, TIER said.
The service composite index for October fell 2.23 points from a month earlier to 91.05, also marking the second straight month of decline, TIER said. The October drop also topped the September decline of 2.06 points, TIER added.
As for the construction industry, the sub-composite index of the manufacturing sector also moved lower, down 2.23 points from a month earlier to 91.05 in October, stopping a rebound of 0.17 points seen in September.
TIER said the cautious sentiment in the construction sector came after transactions of homes, shops and offices in Taiwan's six largest cities fell 11.8 percent from a month earlier. Many home buyers expected property prices would fall further, which has made potential buyers put their purchase plan on hold, dragging down the transactions.
The think tank said the local property market is expected to remain in consolidation mode in the near future as many property investors and buyers for self-dwelling purposes remained on the sidelines.
Gordon Sun (???), director of TIER's Economic Forecasting Center, said Taiwan's economy outperformed expectations in the third quarter of this year, up more than 3 percent from a year earlier largely on the back of rush orders.
The fall in the composite indexes for the manufacturing and service sectors seemed to bring back the normal conditions to many local firms, Sun said, so the November indexes are expected to continue to fall.
Due to the strong showing in the third quarter, the Directorate General of Budget, Accounting and Statistics has raised its forecast of Taiwan's gross domestic product growth for 2017 to 2.58 percent from an earlier estimate of 2.11 percent.
Source: Focus Taiwan News Channel