Tue, Feb 01, 2005 - Page 10 News List

December consumer confidence dips

By Jackie Lin  /  STAFF REPORTER

Taiwan's consumer confidence index (CCI) last month slid downward by 1.28 points to 78.85 points from December as respondents expressed worries about the job outlook and price fluctuations, according to a survey released by National Central University yesterday.

Expectations that prices will increase rose to their highest level in the past four years last month, with an overwhelming 82 percent of those polled saying they expect commodity prices to go up in the next six months.

Despite the sentiment, the report's author, Chu Yun-peng (朱雲鵬), said that as prices have "only increased slightly," the current situation is still far from triggering inflation.

Chu is also head of the university's Research Center for Taiwan Economic Development.

Employment Concerns

Respondents also expressed growing pessimism about the job outlook, with 36 percent believing employment opportunities will fall in the near term, up from 31.2 percent in December.

Although the jobless rate fell to 4.09 percent in December -- its lowest point since May 2001 -- consumer sentiment took a downward turn as a new labor pension system slated to take effect in July is expected to affect job opportunities, said Day Jaw-yang (戴肇洋), deputy director of Research Division III at the Taiwan Research Institute (台綜院).

The new pension system requires employers to deposit a minimum of 6 percent of an employee's monthly salary into an individual retirement fund.

"To compensate for additional labor costs, many companies are moving to reduce workers' basic salaries by offering bonuses, and cutting back on the number of full-time employees, replacing them with more temporary staff," Day said.

"Therefore, consumers are turning bearish, believing that it'll be more difficult to land a good job," he said.

Additionally, consumers showed concern over household finances and the nation's economy in the survey, which questioned 2,058 respondents between Jan. 18 and Jan. 23.

Respondents expressed optimism toward stock investments and buying durable goods, however, including houses, cars and large electric appliances.

Stock Market

The consumer indicator for stock investments climbed to 59 points, the highest level since May last year, although only 18.4 percent of respondents said they would choose to buy stocks in the next half year, up from 15.4 percent in December.

As the confidence-related figures are available every month, Chu suggested the government refer to them before mapping out policies, in order to achieve the greatest benefit for the public.

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