The Council for Economic Planning and Development’s (CEPD) index of economic monitoring indicators flashed “yellow-blue” last month after showing “green” in June, indicating a fall from steady growth to gradual economic recovery, the council said yesterday.
“We had hoped to sustain the ‘green’ signal, but last month’s data showed that the economic recovery was not strong enough,” Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, said at a press conference.
While the financial sector’s performance was strong last month, production levels, exports, consumption and labor market conditions deteriorated, Hung said.
Former council chairman Chen Pao-chih (陳博志) said the “green” seen in June was caused by a lower base level the previous year, adding that the government should work hard to improve exports, employment, production and investment.
The council uses a five-color spectrum to gauge economic health, with “blue” signaling recession, “green” steady growth and “red” overheating, while “yellow-blue” indicates a transition between recession and growth, and “yellow-red” a transition between growth and overheating.
The latest report showed the score of monitoring indicators — which takes into account both leading and coincident indicators — declined three points to 20 points from 23 points a month ago because of lower export growth and shrinking growth of imports of machineries and electrical equipment from a year ago.
The index of leading economic indicators, which is used to gauge the nation’s short-term economic outlook, posted its third consecutive decline to drop to 100.22 points last month, down 0.13 percent from a month earlier, the council said.
The index of coincident indicators, which reflects monthly economic conditions, rose 0.01 percent to 98.87 points last month, marking the third consecutive increase, it said.
Starting yesterday, the council adjusted the composition of monitoring indicators to better reflect the economy’s condition. Direct and indirect finance was eliminated because of the lack of sensitivity, while manufacturing sales is replaced by sales index of producer’s shipment for manufacturing, while the sales index of domestic commercial sales will be replaced by a sales index of domestic trade, because the new indices are less affected by short term changes, the council said.
The council said it also added the manufacturing sector composite indicator of the Taiwan Institute for Economic Research (台經院) because it can gauge the sentiment of manufacturers over the next six months.