The government’s business monitoring system edged up to flash “yellow-blue” last month, after flashing “blue” for 10 consecutive months, aided by better imports of machinery and electrical equipment, but the improvement might not last amid a stalling global economy, the National Development Council (NDC) said yesterday.
“The yellow-blue light was an indication that the economy is changing gears, but it is hard to say whether it would turn better or worse,” council research director Wu Ming-huei (吳明蕙) said at a press conference.
Wu cited as an example leading indicators, which resumed a mild downturn last month after holding steady one month earlier, suggesting continued economic weakness.
The total score for the council’s business indicators rose to 17 last month, just one point above the recessionary “blue” zone, the council’s report showed.
Imports of machineries and electrical equipment usually stem from export needs, and expectations of better orders and sales likely drove local companies to expand manufacturing capacity, Wu said.
Technology companies by and large gave a conservative guidance about their business outlook for the current quarter, but expect a concrete improvement in the second half of the year.
The council’s trend-adjusted leading indicators, which predict the economic scene one to six months ahead, dipped 0.25 percent to 97.72, as the semiconductor book-to-bill ratio and Taiwan Stock Exchange closing prices registered positive cyclical movements.
However, the indices on export orders, building permits and money supply declined, the report said.
In particular, the contraction in export orders widened to double-digit percentage points last month, indicating that actual shipments this month might deteriorate after the pace of decline eased one month earlier.
The coincident indicators, a mirror of current economic status, slid 0.05 percent to 98.26 last month, constrained by tepid exports, industrial production sales, and wholesale and retail business, the report said.
“Against this backdrop, consumers will hesitate to spend freely,” Wu said.
Separately, the consumer confidence index shed 0.55 points to 79.82 this month, dropping below the 80-point level for the first time since January 2014, a survey by National Central University showed yesterday.
All six sub-indices lost values as uneasy sentiment deepened, the survey indicated.
The reading on inflationary expectations reported the biggest fall of 1.55 points to 56.65, consistent with gradual hikes in international crude prices, while the gauge on employment fell 0.75 points and the measure on investment outlook shed 0.7 points, the survey showed.
People voiced less confidence about household income in the coming six months and turned slightly more conservative about durable goods consumption, it showed.
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