Business sentiment fell for the second consecutive month in February to below the 50-point mark as confidence weakened following the end of the government's year-end festive tax measures, reports the Bank of Thailand's business sentiment index (BSI).
The central bank released its BSI for February, which moderately decreased to 49.8 from 50.1 in January, the second consecutive month of decline.
A score above 50 indicates positive business sentiment while one below 50 means weak sentiment.
In January the BSI contracted to 50.1 from 50.3 in December, partly because of concerns over higher production costs, which had been rising in line with commodities prices.
The dip in February's BSI was attributed to the weakened confidence of business operators and lower orders for the book subindex of the non-manufacturing sector, particularly trade.
"The confidence of respondents in the trade sector continued to decline after gaining in an earlier period from the government's year-end festive tax measures," said the report.
However, the confidence of respondents in the manufacturing sector continued to improve for the second month in a row, especially in the production and export order book subindex for electronics appliances and the food and beverage sectors as export conditions brightened.
The report indicated the three-month expected index declined from 56.3 in January to 55.5 in February, mainly from respondents in non-manufacturing sectors, following softer confidence in expected order books, production and performance sub-indices.
Even though the expected BSI remained above 50 points, the fall in February was the first decline after three months of increases.
"This was in line with the increase in the percentage of respondents who expressed concerns over sluggish domestic demand as the top constraint of doing business," it said.
The liquidity sentiment index also fell, partly because of the extension of credit terms made to customers.