Economy

Business Confidence Cools in August Despite Record Exports

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By TaiwanPlus

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Taiwan’s exports are hitting record highs but businesses have become more cautious as higher prices for memory and chips boost the value of exports but not necessarily the volume. The Taiwan Institute of Economic Research (TIER) says business confidence fell most sharply in the services and construction sectors in August. Weakness in financial markets weighed on services, although a stronger stock market supported consumer spending. Manufacturers also grew more cautious, with export growth increasingly dependent on the release cycles of major technology products.

Business Sentiment Cools in August

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Title: Business Sentiment Cools in August

REPORTER:  
Taiwan’s exports are hitting record highs, but businesses are growing more cautious. That's according to a top economic think tank, which says higher prices for memory and chips are boosting some sectors, while raising concerns across others.

Fang Jiun-te (TIER):  
If the value of exports and export orders is still increasing  
it's of course mainly because of higher prices.  
This time, memory prices have gone up.  
So with prices rising  
it's not necessarily clear whether the actual volume has increased.  
So businesses may not be as confident about the outlook.

REPORTER:  
The Taiwan Institute of Economic Research says confidence in August fell most sharply in the services and construction sectors. Weakness in the financial sector weighed on services, though consumer spending was supported by a stronger stock market. Manufacturers also grew more cautious, as export growth becomes increasingly dependent on the release cycles of major tech products.

The proportion of manufacturing firms that reported improved business conditions in the current survey period was 17.8%, a drop of 13.9 percentage points from 31.7% in the prior month. Conversely, the proportion of those reporting a deterioration was 27.5%, an increase of 12.0 percentage points from 15.5% in the prior month. The remaining 54.7% assessed business conditions as unchanged, a slight increase of 1.9 percentage points from 52.8% in the prior month.

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Title: Business Sentiment Slows Despite Record Export Growth

REPORTER:  
Overall business sentiment in Taiwan cooled in August, even as the month saw record export growth of 41% from last year. That's according to a top economic think tank, which says higher prices for memory and chips create both opportunities and uncertainty.

Fang Jiun-te (TAIWAN INSTITUTE OF ECONOMIC RESEARCH):  
Of course, export values and export orders are still increasing  
but that's mainly because of higher prices.  
This time, memory prices have gone up,  
So with prices rising  
it's not necessarily clear whether the actual volume has increased.  
So businesses may not be as confident about the outlook,  
at this point.

REPORTER:  
The Taiwan Institute of Economic Research says sentiment decreased most markedly in services and construction. Weaker results in the financial sector weighed on services, while consumption was an overall positive – supported by a rising stock market. In manufacturing, businesses reporting good conditions fell from about 32% to 18%, while those who saw a deterioration jumped from about 16% to 28%, as the driver of exports changed from previous months:

Sun Ming-te (TAIWAN INSTITUTE OF ECONOMIC RESEARCH):  
TSMC told us last month  
that its two peaks in server shipments to the US had already passed.  
So why are we seeing another peak this month?  
It's not because of AI.  
It's because of Apple.  
Apple launched its new iPhones,  
and started shipping electronic components two months ahead of the launch,  
to India and China.

REPORTER:  
Despite the change, more manufacturers expected business to improve than to decline in the coming six months.

The proportion of manufacturing firms that reported improved business conditions in the current survey period was 17.8%, a drop of 13.9 percentage points from 31.7% in the prior month. Conversely, the proportion of those reporting a deterioration was 27.5%, an increase of 12.0 percentage points from 15.5% in the prior month. The remaining 54.7% assessed business conditions as unchanged, a slight increase of 1.9 percentage points from 52.8% in the prior month.