Taipei, May 26 (CNA) Business sentiment in the local manufacturing sector fell for the first time in six months in April amid weakening global end-user demand, according to the Taiwan Institute of Economic Research (TIER).
Data compiled by TIER, one of Taiwan's leading economic think tanks, showed the April composite index gauging business sentiment in the local manufacturing sector fell 2.06 points from a month earlier to 91.08.
The decline broke a five-month streak of rising business sentiment, according to TIER.
In April, global demand from end-users remained weak at a time when demand from China in the post COVID-19 era failed to meet the market's previous expectations, TIER said, adding under such circumstances, exports-oriented Taiwanese manufacturers continued to face inventory adjustments and turned cautious about their operations.
Taiwan's exports and export orders both fell for the eighth month in a row in April, slumping 13.3 percent and 18.1 percent, respectively, from a year earlier.
Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, said business sentiment among local manufacturers served as a leading indicator of economic health.
As a result, Sun said, the preceding five months of increased optimism signaled a positive sign for the near future, with April's turnaround simply representing turbulence on the way for Taiwan's manufacturing sector to become stable.
In addition to falling global demand, Sun said, the decline in Taiwan's outbound sales and export orders in the past several months also reflected a relatively high comparison base over the same period of last year but that the worst could end over the next one to two months.
Citing a survey, TIER said only 9.8 percent of respondents in the local manufacturing sector thought their operations improved in April, down sharply from 30.7 percent in a similar poll conducted in March, while 46.4 percent of them agreed their business deteriorated in April, up from 21.6 percent in the March poll.
Meanwhile, 27.3 percent of the respondents said they believed business would improve over the next six months, compared with 21.2 percent in the March poll, and 24.5 percent thought their operations would deteriorate over the next six months, compared with 24.3 percent in the survey conducted in the previous month, according to TIER.
TIER President Chang Chien-yi (張建一) said that while many exporters in Taiwan believed their inventory levels were declining, they remained worried that the current high inflation worldwide would continue to hurt demand.
TIER's composite index assessing business sentiment in the local service sector also fell 0.54 from a month earlier to 98.56 in April.
TIER said many retailers remained optimistic about their business in April in the wake of rising consumption in the post-pandemic era, with Chang noting that the fall in the composite index in the service sector was minor.
Chang said the government was keen to push for public work projects to further boost domestic demand, but that Taiwan's economy remained at the mercy of external factors, such as global demand. He reiterated the country would have to "work very hard" to push its GDP growth to 2 percent this year.
In April, the composite index gauging the business sentiment of the local construction industry bucked the downturn, rising 3.73 from a month earlier to 95.06 on the back of the government's efforts to execute public work projects, TIER said.
