Economic indicators slide even further

The nation's economic indicators continued to slide for the sixth month in March, flashing a "yellow-blue" light for the first time since June 2003, according to a report released yesterday by the Council for Economic Planning and Development (CEPD).

"The results display a continued softening on both the financial and real sides of the nation's economy," said Liao Yaw-tsung (廖耀宗), director of the CEPD's Department of Overall Planning.

The index of leading indicators last month decreased by 0.4 percent to 106.3 points. The index of coincident indicators, which measures the pace of economic activity, slipped by 1.4 percent to 109.2. The monitoring indicators were adjusted from "green" to "yellow-blue," signaling a transition into an economic slowdown, which would require close monitoring, the report said.

The CEPD uses a five-level spectrum to measure domestic economic health, with "blue" indicating recession, "yellow-blue" a slowdown, "green" steady growth, "yellow-red" a slight overheating and "red" a serious overheating.

Among the seven factors that make up the index of leading indicators, three made positive contributions: the value of exports clearing customs, the growth of M1B money supply and the approval of property construction. The total of working hours in the manufacturing sector, new orders received by manufacturers, the stock-market index and the change in wholesale prices showed negative variations.

As for the six components that make up the coincident index, only the average monthly wage of manufacturing workers increased, while the other four components -- industrial and manufacturing production, manufacturing sales and bank clearings -- showed negative growth, the report showed.

The total score of the monitoring indicators fell by two points to 21 points last month, mainly due to a decline in industrial production and non-agricultural employment, the CEPD said.

Despite the continuing slide, the council said it will strive to achieve its GDP target, which was lowered to 4.5 percent from 5 percent by Premier Frank Hsieh (謝長廷) when he took office in February, Liao said.

The report suggests that the economy is likely to rebound in the second half of the year, regardless of the uncertainty surrounding factors such as oil prices and flattening global demand, as a survey showed that manufacturers turned optimistic about the economy.

Export orders reached a record US$20.9 billion last month, and the unemployment rate improved from 4.28 percent to 4.15 percent in the same period, also signaling an upturn, the report said.

To attain the GDP target, the council plans to attract more inbound investment, and press through major construction projects to stimulate consumption, Liao said.