The nation’s economic monitoring indicators have flashed “red” for the fourth consecutive month as the economy continues to recover, although consumer confidence has fallen, snapping an eight-month bullish streak, because of bearish sentiment on investment in the stock market.
The headline economic index remained unchanged at 39 points last month, with the sub-index of direct and indirect finance turning “yellow-blue” after 16 months of showing “blue,” the Council for Economic Planning and Development (CEPD) said yesterday.
Downplaying the first-ever occurrence of the indicator showing “red” for four months in a row, CEPD vice chairman Hu Chung-ying (胡仲英) attributed the results to the fact that the comparison base in the same period last year was extremely low.
“The economy is still far from overheating given weak domestic consumption and persistently high unemployment,” Hu said, adding that there was a lot of room for improvement in domestic demand.
The report showed that the sub-index for wholesale, retail and food services lost one point, switching back to a “yellow-red” level from “red,” with signals for the other components remaining unchanged.
The composite leading index stood at 109.6 points last month, up 0.4 percent from March, but its annualized six-month rate of change dropped 2.8 percentage points to 13.4 percent, posting a decline for the third straight month.
“This indicates that the pace of economic growth in the following six months will gradually abate,” Hu said. “The momentum of growth in the second half of this year will not be as strong as that of the first half.”
Remaining upbeat toward steady economic growth, Hu predicted that the headline monitoring indicator would continue to flash “red” this month for the fifth time because of the low base effect.
Despite evident signs of economic growth, recent global economic turbulence seems to have sapped consumer confidence, as its headline index has dropped for the first time for eight months, a National Central University survey showed yesterday.
The university’s Research Center for Taiwan Economic Development said in a report that its consumer confidence index edged down 2.68 points to 76 this month, chiefly because of a plunge of 15.6 points on the sub-index for equity investment in the near future.
In addition, public confidence on purchasing durable goods over the next six months has also decreased, with its sub-index declining 8.45 points to 93.6, compared with 102.05 registered last month.
“The drop in these two sub-indexes suggest that investors are uncertain on asset prices in the near future because of the European debt crisis and credit tightening measures,” center director Hsu Chih-chiang (徐之強) said by telephone.
The public feels more confident about job opportunities in the next six months, however, because of the economic recovery, Hsu said, saying that the employment sub-index edged up 2.55 points to 75.25, posting the biggest gain among all the categories.
The sub-index for the economic outlook over the next half year continued to rise to 83.2 points, up from last month’s 80.8 points. That was only the second time since August 2004 that the sub-index has capped 80 points, the report showed.
Public confidence on household finances and consumer prices over the next half year also strengthened this month, with the former up 1.55 to 72.05 points and the latter rising 1.5 to 53.65 points.
“Overall, the public still remains optimistic about the economy,” Hsu said.
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