Manufacturing and service sectors improve m-o-m from June: TIER
By John Liu,The China PostTAIPEI, Taiwan -- Both the manufacturing and service sectors experienced month-on-month growth in July, while the construction sector declined, according to a report released yesterday by the Taiwan Institute of Economic Research (TIER, 台經院).
August 27, 2013, 12:04 am TWN
The manufacturing sector rose 0.89 points to 98.40 and the service sector rose 1.31 points to 95.76, while construction index fell 0.75 points to 97.39. This was the second consecutive monthly declining in construction, with the July index a new low since December 2012.
Real Estate Market
A scholar from TIER said that the impending amendment to the luxury tax has caused real estate buyers to take a cautious approach, affecting July's property transactions. In addition, there was a lack of interested bidders in major construction projects, resulting in a worse-than-expected performance in the construction sector.
TIER said that the government's bid to encourage private investment in large-scale infrastructure developments as well as private construction projects is expected to enhance the realty market's performance in the second half.
The luxury tax, however, is expected to become more stringent, and the U.S.' expected tapering off of quantitative easing before the end of the year may negatively impact the real estate sector in the second half. The institute added that it holds a conservative outlook for the housing market in the short term.
Regarding the impending electricity price hike in October, Macroeconomic Forecasting Center Deputy Director Darson Chiu (邱達生) said that the hike may transfer into higher operation costs for domestic firms. With recent underperforming exports and with new order figures for the remainder of the year unpredictable, Taiwan may experience slow economic growth.
Nevertheless, Chiu forecast the second half to outperform the first.
In terms of private consumption, TIER President David Hong (洪德生) said that since the unemployment rate has not improved, with real earnings not increasing and with private investment dropping, domestic demand may fall short of expectations.
Both China's trade performance and private consumption improved from June, which is a positive sign indicating that the mainland may drive the global economy upward, Hong said.
However, there is some cause for concern in the second half. The U.S. is expected to phase out its quantitative easing later this year, which will induce turbulence in stock markets around the globe. In addition, exports of major ASEAN countries have shown declines from the same period last year.
With an electricity price increase set for October, firms are now conservative regarding the economic outlook, TIER said, adding that there are still uncertainties in the remainder of the year.