Consumer confidence fell by 0.75 points to 81.34 this month, from last month’s 82.09, dragged mainly by a weaker demand for durable goods as concerns over a housing price correction deepen, a survey by National Central University showed yesterday.
It remains to be seen if the sentiment for durable goods would turn around following the central bank’s relaxation of mortgage restrictions last week, since the survey was conducted on March 18 and March 19.
The durable goods consumption sub-index suffered the biggest fall, at 1.95 points, to retreat to 91.35 this month, as soaring housing prices and correction expectations drove possible buyers away, said Dachrahn Wu (吳大任), a professor of economics and director of the university’s Research Center for Taiwan Economic Development, which conducted the survey.
“Concerns over a supply glut lingers, but the removal of credit controls will help mitigate the unease,” the economist said. “The market will need more time to digest the easing move.”
Poor economic fundamentals weighed on other confidence readings as well.
The economic outlook sub-index lost 0.25 points, falling to 73.65 from last month’s 73.9, the survey found, as major economic data — such as exports, industrial output and export orders — stayed in negative territory.
The economic weakness prompted the central bank to cut interest rates by 12.5 basis points last week, the third time over the past six months, in the hope that lower borrowing costs would spur private investment.
The stock investment sub-index fell 1.5 points to 70.6, as investors turned conservative about continuing rallies, the survey said, after the TAIEX staged a 3.32 percent rebound this month.
Wu attributed the rebound to capital inflows seeking higher yields after the European Central Bank stepped up quantitative easing and the US Federal Reserve left policy rates unchanged.
The local bourse might trade between 8,300 and 8,800 until the economy emerges from the downturn next quarter at the earliest, Wu said.
The household sub-index fell 1 point to 79.9, while the job market sub-index pared 0.3 point to 113.55, the survey said.
Most companies have voiced no plans for pay rises this year due to softening business, Wu said.
The job market has proven to be resilient so far, explaining why the confidence gauge remains above the neutral 100 point mark, the survey said.
Confidence values of 100 or more suggest optimism and scores lower than that indicate pessimism.
The sub-index on inflation is the only component with positive movement this month as it inched up 0.5 points to 59, the survey found, as vegetable and fruit prices picked up noticeably due to bad weather.
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