The Council for Economic Planning and Development (CEPD) said yesterday that it was worried about a potential economic slowdown as the annualized six-month moving average of leading indicators decreased 0.4 percentage points to 2.2 percent from the previous month.
“As this is the sixth consecutive month that the leading indicator’s annualized six-month change of rate declined, the CEPD is worried whether this might indicate that Taiwan’s economy has gone into a period of economic contraction,” Wu Ming-huei (吳明蕙), director of the CEPD’s economic research department, said at a press conference yesterday.
The CEPD attributed the decline to a global economic slowdown and rising international crude oil and commodity prices, which impacted on the nation’s economy.
Three of the components of the leading indicators improved last month, including the stock index, manufacturing inventory and overtime work hours in industrial and service sectors. The other four components — including money supply (M1B), building permits, export orders and semi book-to-bill ratio — declined.
Aside from the leading indicators, the trend-adjusted coincident indicator also dropped 0.1 percent last month from a month ago, making it the second month that the index declined.
Three components of coincident indicators — electric power consumption, imports of machinery and electrical equipment and nonagricultural employment — showed improvement, while four other components deteriorated — the industrial production index, exports, manufacturing sales and wholesale, retail and food services sales.
As both leading and coincident indicators declined last month, the CEPD said it would pay close attention to their development.
Despite this, the CEPD said the nation’s economic climate remained stable, as the indicators signaled a “green” light for the sixth consecutive month and the total score remained at 27 points last month.
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 nine components that make up the monitoring indicators, five showed changes in their individual light signals last month, with three of them strengthening, and two of them falling from a month ago.
The light signal for stock prices strengthened from green to yellow-red last month, while light signals for nonagricultural employment and wholesale, retail and food services strengthened from “yellow-blue” to “green,” the CEPD report showed.
The light signal for customs-cleared exports fell from yellow-red to green last month, while imports of machinery and electrical equipment fell from green to yellow-blue, the report showed.
Looking ahead, the CEPD said it was cautiously optimistic about the nation’s economic climate because of the government’s efforts to maintain price stability and expand domestic demand.
Furthermore, the planned launch of weekend cross-strait charter flights and the opening-up of Taiwan to Chinese tourists are also expected have positive repercussions.