Consumer confidence climbed to a record high this month, but remained below the neutral threshold as people gained more optimism over stock investments after the European Central Bank announced plans to increase its quantitative easing, lending support for global bourses, a survey by National Central University showed yesterday.
The Consumer Confidence Index reached 88.23 this month, the highest since the university initiated the survey in January 2001, as companies prepare to distribute bonuses ahead of the Lunar New Year holiday, National Central University economics professor Dachrahn Wu (吳大任) said.
The holiday runs from Feb. 18 to Feb. 23 this year.
“Expectations of extra income make consumers more upbeat,” Wu said, as the confidence reading remains in the negative zone.
A confidence score below 100 indicates pessimism and values above the threshold suggest optimism, the survey said, meaning the public has never felt confident in the past 14 years, due mainly to stagnant household incomes.
The sub-index on household income rose 1.35 points to 81.2 this month, as 46.5 percent of respondents expect their income to stay unchanged in the coming six months, the survey said. About 39 percent expected their income to shrink moving forward, while 14.4 percent were looking at an increase, the survey said, after interviewing 2,426 people aged 20 and older last week.
Wage stagnation dragged down the sub-index on consumer prices to a score of 50.5, from 50.05 last month, the survey said, suggesting the public is very anxious about inflationary pressures.
The finding came despite benign consumer prices at home and sharp declines in international crude oil prices, Fu Jen Catholic University statistics professor Shia Ben-chang (謝邦昌) said.
Cheaper energy prices are expected to translate into lower production costs for companies and pay raises for employees, Shia said, calling on companies to share the benefits of low oil prices with employees.
Similarly to last month, the sub-index on stock investments recorded its biggest increase of 4.4 points to 92.3 this month, the survey said, as the TAIEX gained 2.2 percent on the back of hot money inflows.
Foreign institutional investors increased holdings in local shares by a net NT$64.5 billion (US$2.06 billion) last week, said Day Jaw-yang (戴肇洋), a researcher with the Taiwan Research Institute (台灣綜合研究院), which helped sponsor the survey.
The trend is likely to maintain its course going forward, as the Financial Supervisory Commission plans to introduce more measures to reinvigorate the local bourse, Day said.
The wealth effect might drive people to increase purchases of durable goods and big-ticket items, lifting the contribution of domestic demand to GDP growth this year, he said.
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