The intensity of the recession appeared to have slackened last month as both the leading and coincident indexes reported modest improvements from a month earlier, thanks to an improvement in money supply, export orders, share prices and other indicators, the Council for Economic Planning and Development (CEPD) said yesterday.
However, the annualized six-month rate of change for the leading indicator remained in negative territory, affirming a slowdown that is expected to persist until the fourth quarter, the CEPD report showed.
“Financial and manufacturing data improved in March as seen in the decelerating decline in the leading indexes,” said Hung Jui-bin (洪瑞彬), director-general of CEPD’s economic research department.
The composite leading index, used as an indicator of the economic outlook one to two quarters ahead, dropped 13.8 percent last month, compared with an 18.4 percent fall in February, the report said.
Five of the seven components — M1B, export orders, semiconductor book-to-bill ratio, share valuation and producers’ inventory volume — all showed gains from a month earlier, with M1B posting 5.4 percent growth, the report said.
The central bank said on Friday that active stock trading and US$1.449 billion in net capital inflow last month accounted for the boost in the M1B, which refers to currency held by the public as well passbook savings.
However, the sub-indexes of building permits and average monthly overtime in industry and services deteriorated further, the report said.
CEPD researcher Wu Ming-huei (吳明蕙) said M1B increased for two straight months, but still wasn’t strong enough to lift the business cycle signal, which flashed its seventh “blue” light.
The concurrent indicator, used to reflect the present economic state, picked up 0.7 percentage points to 80.3 points, while its trend-adjusted reading climbed 0.7 percentage points to 78.6 points, the report said.
Wu attributed the upturn to positive cyclical movements in industrial output, outbound shipment value, wholesale, retail and food services gauges.
Unemployment, on the other hand, remained a drag on the overall index after hitting a new high of 5.81 percent last month, the report said.
Hung and Wu warned against taking the easing downturn as a sign of recovery, saying that while the recession might not be deepening, it was too early to talk about concrete growth.
The IMF last week revised down its forecast for Taiwan’s economy, saying GDP would contract by 7.5 percent this year, from its March forecast of a drop of 1.5 percent.
The adjustment resulted from the institution’s concerns that the global downturn was proving more harmful than expected, Hung said.