Manufacturers cautious about prospects

The ratio of local manufacturers who perceived business would get worse in the second half of the year surged to the year's high of 17.7 percent in July, up 0.5 of a percentage point from June's 17.2 percent, according to findings of a TIER survey released yesterday.

The poll also indicated that the ratio of manufacturing firms optimistic that their business prospects would turn for the better in the second half of the year plunged sharply from June's 34.1 percent to 29.4 percent in July, marking the first time the corresponding figure fell under 30 percent so far this year.

Some 52.8 percent believe there will be no change in the economic prospects, a rise from the 48.7 percent that held that view in June, the survey showed.

Chen Miao, director of TIER's macroeconomics forecasting center, attributed manufacturers' increased pessimism about their business prospects in the second half of the year partly to their worries that the serious debt crises of countries in Southern Europe might undermine consumer spending in Europe and the U.S., which in turn, is likely to affect their exports to both markets.

Chen told a press conference that most local manufacturers of petrochemical products were upset about their sales prospects in the months ahead, given the fact that the international prices of crude materials are on the rise and some petrochemical products failed to be among the “early harvest” list under the cross strait economic cooperation framework agreement (ECFA) signed in late June.

On the same occasion, TIER President David Hong forecast that the growth of the manufacturing industry will slow down on weaker demand in European markets and slower growth in China.

However, the global economy is expected to continue to grow as the economies of the U.S., major European countries and Japan continue to improve, he said.

“In Asia, the emerging economies are still expanding, which will also help drive the global growth,” he said.

Another survey conducted by the institute on the local service industry showed that wholesalers and retailers were optimistic about the economic outlook as they were seeing increased turnover.

In the financial sector, the sentiment was bullish based on the rising stock market and improving domestic economy, the survey showed.

Both the tourism sector and the bulk transport industry were neutral about the economic outlook for the next six months as the number of tourists to Taiwan began to drop in the low season and there was less demand in China's steel industry for materials, the institute said.

Meanwhile, the TIER's manufacturing composite indicator for July stood at 116.88 points, up 0.24 point from June's 116.64 points, and the service composite indicator posted a decline of 2.61 points to reach 124.43 points.

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