The slowdown continues

Official data shows that the economy is losing momentum, but a survey indicated domestic businesses becoming more optimistic about the nation's economic outlook.

The January index of leading indicators -- reflecting the state of the economy three months to six months ahead -- fell 1 percent from the previous month, the fourth monthly decline in a row, the Cabinet-level Council for Economic Planning and Development said Friday.

"The lackluster performance of the financial fronts, particularly the stock market, was to blame," Hu Chung-ying (胡仲英), chief of the council's economic research department, said.

The January composite indicator stood at 20 points, down from 24 points in the month before.

The composite index in January came in at a "yellow-blue light," which signifies a slowdown, it said.

The January showing reversed nine consecutive months of "green light" level activity that reflects steady economic growth, the council said.

Of the seven leading indicators, average monthly working hours in the manufacturing sector and housing start approvals in area terms in January saw their year-on-year growth expand on a seasonally adjusted basis from the previous month, and the January wholesale price index also registered higher growth from six months earlier than that in December.

While January M1B, orders for manufacturers and customs-compiled exports in value terms posted lower year-on-year growth, the year-on-year negative growth in stock index expanded in January, the council said.

Hu said that he expects the economy to bottom up in the second quarter and begin to hit an upswing in the third quarter after the lingering uncertainty sparked by the escalating tensions in the Middle East is removed.

Manufacturers apparently feel that the outlook is not too gloomy, according to a survey conducted by the council.

About 26 percent of manufacturers expect the economy to improve over the next three months, up from a 21 percent a month earlier, while 10 percent held a negative view, down from a 13 percent in the previous month, the council said.

It said 64 percent of manufacturers expect the economy to maintain its current direction, down from 66 percent in December.

Profit margins in the manufacturing sector during January averaged 5 percent, up 0.1 percentage point month-on-month and up 1.1 percentage points from a year earlier.

The factory utilization rate in January averaged 78 percent, unchanged from December and up 2.2 percentage points year-on-year.