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Business climate deteriorates in August: TIER.

Taipei, Sept. 27, 2011 (CENS) -- Taiwan Institute of Economic Research (TIER), a private economic research body, released a report yesterday (Sept. 26) showing that the business climate of both the service industry and the manufacturing industry deteriorated in August.

The service industry's business index plunged to a level which is the lowest since July 2009, while the share of manufacturers with a gloomy business outlook surged.

Chen Miao, director of the business forecast center of TIER, predicted that Taiwan's business climate will decline further. Although stock market crash in August had yet to affect private consumption, further decline of the stock market, which already broke the 7,000-point mark yesterday, will impact consumption sentiment, as people begin to feel the shrinkage of their assets.

In August, the service industry business index sheds 6.3 points to 99.43, from July's 105.73, while the manufacturing business index slipped to 95.35, from July's 96.46.

Chen Miao attributed the decline in the service industry business index to stock market crash August, which dampened profits of securities firms and banks. The securities industry, for instance, suffered a loss of NT$3.3 billion in August, compared with profit of NT$4.5 billion in July.

Private consumption remained robust in August and retailers and wholesalers harbored a rosy outlook for their business in the next half a year.

In sharp contrast, the share of manufacturers with a gloomy outlook for their business in the next half a year jumped from July's 19.5% to 29.7% in August, compared with 21.1% for manufacturers with a rosy outlook.

While the share of manufacturers with a gloomy outlook surged, the business index of the manufacturing industry only suffered a minor decline, as manufacturing lines with higher weight didn't deteriorate. Prices of consumer electronics, semiconductor, foundry, and DRAM, for instance, remained steady, while FPD manufacturers switched to small-sized models for use in tablet PCs, such as iPad.

The number of manufacturing lines with a gloomy outlook increased, including petrochemical materials, machinery equipment, machine tool, industrial machinery, securities, auto parts, plastics, transportation equipment, motorcycle and parts, and bicycle and parts.

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Author:Liu, Philip
Publication:The Taiwan Economic News
Date:Sep 27, 2011
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