The government’s indicator of business activity flashed a “yellow-blue” light last month, ending 10 months of “green” and indicating that the economy is slowing, dragged down by flagging exports and capital equipment investments, the National Development Council said yesterday.
The total score of the government’s monitoring indicators dropped to 22 last month, 3 points less than one month earlier, indicating that the economy moved from stable to shifting gears as downside risks heightened, the council said in a report.
The most evident downside risks are weaker-than-expected exports that contracted 2.8 percent last month from year-ago levels, Ministry of Finance data showed.
In addition, imports of capital equipment fell 24.7 percent year-on-year to US$2.93 billion last month, while machinery purchases slumped 26.5 percent to US$1.94 billion, the ministry statistics showed.
The fast retreat suggests that firms have turned cautious due to softer demand. The nation is home to the world’s biggest contract chipmakers and chip designers, notebook and smartphone vendors and critical component suppliers.
The trend-adjusted leading index, which aims to foretell domestic business conditions, stood at 99.66 last month, down by 0.06 percent from November last year, affirming a soft patch going forward, the report said.
Of the seven constituent indicators, the indices of export orders and M1B money supply recorded positive cyclical movements from one month earlier, while building permits, semiconductor book-to-bill ratio, stock closing prices and employment figures moved downward, the report said.
The trend-adjusted coincident index, which reflects the current business state, hit 101.68 last month, up 0.08 percent from November last year, the report said.
Industrial output, retail sector and food sales yielded positive results, but electricity consumption and exports displayed negative cyclical movements, the report said.
Looking forward, the council said the nation might stage modest GDP growth this year as the US economy might continue to strengthen, while falling oil prices are favorable for consumer spending.
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