Taipei, March 25 (CNA) Business sentiment in Taiwan's export-oriented manufacturing sector improved slightly in February from a month earlier in the wake of a recovery in global demand, the Taiwan Institute of Economic Research (TIER) said Monday.

The composite index, which gauges business sentiment among manufacturers, rose 0.06 from a month earlier to 98.18 in February, its highest level in 23 months, according to data compiled by the TIER, one of the leading think tanks in Taiwan.

The think tank said the limited scale of the increase was the result of fewer working days in February, as the seven-day Lunar New Year holiday scaled back manufacturing activity.

Companies in Taiwan's manufacturing sector seemed to feel that reduced activity but appeared more upbeat about their operations over the next six months due to growing global demand after inventory adjustments.

In a separate survey conducted by the TIER in February, 11.7 percent of respondents in the local manufacturing sector said their business improved from a month earlier, down from 31.5 percent in a similar poll conducted in January.

Another 36.7 percent of them said their operations deteriorated in February, up from 21.9 percent in the January poll.

Some 50.2 percent of respondents in the February survey, however, expected their operations to improve over the next six months, up from 27.6 percent in the January poll.

Another 11.1 percent of them said their operations were expected to deteriorate over the next six months, down from 19.8 percent in the January poll, the survey found.

TIER Economic Forecasting Center Director Gordon Sun (孫明德) said that as Taiwan's export performance picks up amid a revival of global demand, private investment is expected to accelerate to give another boost to the local economy and manufacturing.

In the service sector, the composite index fell 0.46 percent from a month earlier to 97.72 in February, according to the TIER.

The tourism industry remained upbeat about its operations over the next six months, however, as domestic spending expands in the post COVID-19 era, the think tank said.

More than 50 percent of hotel operators and restaurant owners expressed optimism toward their business over the next six months, it said.

After the recent boom in the local stock market driven by an artificial intelligence frenzy, about 20 percent of the securities firms that responded to the survey said they had turned cautious over the stock market's prospects over the next six months.

But 40 percent of them still said they were upbeat about the economy over the next six months, the TIER said.

Sun said that as long as Taiwan's main stock market index stays above the 20,000-point mark, investors who rake in gains on their shares are expected to spend, which should push up private consumption.

On Friday, the Taiex hit a closing high for the third consecutive session at 20,228.43 before finishing at 20,192.25 on Monday.

In the construction industry, the composite index for the industry fell 2.82 from a month earlier to 103.66, ending a three-month rising streak, as developers faced a shortage of construction workers, slowing down their housing projects, the TIER said.

In addition, a hike in construction material prices also affected business sentiment among property developers, the TIER added.

Nonetheless, the construction industry remained upbeat about its business prospects over the next six months, as more consumers looking to buy new homes to live in are expected to jump into the market, the think tank said.

Liu Pei-chen (劉佩真), a researcher at the TIER's Taiwan Industry Economics Database, did not expect the relatively small 12.5 basis-point hike in interest rates by the central bank, effective from Friday, to cool down the property market.

The central bank's move was aimed at reducing inflationary pressures after the Ministry of Economic Affairs said it would raise electricity rates starting April 1 to help state-owned Taiwan Power Co. reduce its massive losses.

TIER analyst Fang Chun-te (方俊德) said the hike in power rates was lower than expected and was not expected to have a major impact on inflation.

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