The business climate index of the service industry stood at 106.83 points in November, the lowest level in five years, due largely to a conservative attitude among local firms over the nation's economic outlook, according to a survey conducted by Taiwan Institute of Economic Research (TIER,
The TIER survey, released yesterday, showed that the business climate index in November was at the lowest level since December 2001, when the index stood at 115.69.
TIER researcher Chen Miao (陳淼) noted that entrepreneurs in the retail, wholesale, restaurant and telecommunications sectors were remaining conservative last month over Taiwan's economic outlook because of lower private consumption and a saturated market for telecommunication products.
With retail business, although the credit card debt problem has gradually subsided, consumer spending remains low as there has been no notable growth in wages.
Restaurant revenue last month declined from October, resulting in a drop in profits, while the banking sector faces several challenges, including a shrinkage in the retail banking business and fierce competition in corporate banking and housing loan services.
Chen said that it remains to be seen whether the business climate of the service industry would drop further.
TIER yesterday also released the results of a business sentiment survey of local manufacturers that showed many firms remain conservative in their outlook for the month.
The TIER survey showed that only 15.1 percent of manufacturers interviewed last month were optimistic for the month, down from 30 percent in October, while 22.7 percent said they believed things would take a turn for the worse, up from 19.3 percent the previous month.
TIER attributed the pessimism to manufacturers' concerns at fluctuations in raw material prices, which pushed the institute's leading industry index up to 113.09 points last month from 117.02 in October.
As for their outlook for the next six months, TIER said that 30 percent of manufacturers polled said they expected the nation's economic sentiment would turn in their favor, up from 19.7 percent a month earlier.
A total of 56.4 percent of manufacturers polled held a neutral view, a decline from 58.8 percent in the previous month, while those who were bearish numbered 13.6 percent, down from 21.5 percent over the same period, the institute said.
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