Business sentiment in Taiwan’s manufacturing sector increased for the third consecutive month in January on the back of China’s economic recovery and the easing of inventory adjustments by customers, the Taiwan Institute of Economic Research (TIER) said Friday.

The composite index gauging business sentiment in Taiwan’s manufacturing sector rose 1.68 percent from a month earlier to 88.18 in January, according to data released by TIER, one of Taiwan’s leading think tanks.

As for the service sector, the composite index rose 1.95 percent from a month earlier to 91.96 in January, ending five straight months of decline, the TIER data showed.

The TIER said the improvement in the service sector was the result of increased private consumption during the long Lunar New Year holiday period while the tourism market both at home and abroad also rebounded sharply amid easing concerns over COVID-19 infections.

In the construction sector, the composite index fell 0.77 from a month earlier to 91.50 in January, ending two consecutive months of increase, according to TIER.

Gordon Sun (???), director of the TIER’s Economic Forecasting Center, cautioned that despite the upswing in manufacturing and service sentiment, inflationary pressure will remain important this year as inflation in Europe and the United States has begun to slow.

“Inflationary pressure is still high,” Sun said, noting that Japan’s inflation rate has exceeded 4 percent while China’s economic recovery is also expected to drive up prices.

Concerning the U.S. Federal Reserve’s monetary policy, TIER economist Wu Meng-tao (???) said the Fed’s terminal interest rate is projected to remain above 5 percent until the end of the year.

Although some experts and institutions believe the economy will improve in the second half of this year, it remains to be seen whether the decision to raise interest rates, including in Taiwan, will further impact economic growth, Wu added.

Source: Focus Taiwan News Channel