Tue, Mar 29, 2011 - Page 12 News List

Rise in leading indicator index slows

SLIP-SLIDING AWAY:While the composite index stood unchanged from January, the annualized six-month rate of change decreased 0.6%, marking 15 months of decline

By Amy Su  /  Staff Reporter

The leading indicator index rose at a slower pace last month, providing more evidence that the nation’s economic expansion is weakening, the Council for Economic Planning and Development (CEPD) said yesterday.

The composite leading indicator index, which is used to gauge the economic outlook for the upcoming six-month period, stood at 125 points, the same as a month earlier, the council’s statistics showed.

However, the index’s annualized six-month rate of change, which provides a more accurate forecast of business cycles, decreased by 0.6 percentage points to 1.9 percent from a month earlier, indicating 15 months of consecutive decline.

With revised data, the growth rate increased 2.5 percent in January, down 0.7 percentage points from December’s level of 3.2 percent.

“Although the revised rate showed that the expansion of the nation’s economy is slowing down, Taiwan’s economy is still growing steadily,” Hung Jui-bin (洪瑞彬), -director-general of the council’s economic research department, told a media briefing.

As long as the latest leading indicator indices of the G7 developed countries and the OECD both rebounded for the sixth straight month, showing that economic momentum in the US and European countries has been stronger, Taiwan would benefit from their recoveries, Hung said.

However, the latest leading indicator index of the five Asian countries — China, India, Indonesia, Japan and Korea — showed a slowing growth pace, indicating that economic momentum in Asia has contracted, Hung said.

CEPD vice chairman Hu Chung-ying (胡仲英) said the global economic sentiment, especially in Asian countries, had been influenced substantially by this month’s massive earthquake in Japan.

“Japan’s quake will drive up the uncertainties for Taiwan’s economic momentum,” Hu said.

Commodities prices will be the main worry Taiwan, as the demand for commodities from -disaster-stricken areas in Japan might further drive up local inflationary pressures, Hu said.

Of the seven components that make up the leading index, only the stock price index experienced a positive cyclical movement last month from the previous month, while the other six moved down, the report said.

The semiconductor sector’s book-to-bill ratio stood below the neutral threshold for the fifth straight month at 0.87 last month. The measure is important because the nation is home to the world’s two leading contract chipmakers, Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電).

The coincident index rose 1.3 percent to 135.9 points from a month earlier last month, with its trend-adjusted index increasing 0.3 percent to 106.4, the report showed.

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