Wed, Jun 28, 2017 - Page 12 News List

Business climate cooling: NDC

FALLING INDICATORS:With the exception of closing stock prices and electrical and machinery equipment imports, all indices registered negative cyclical movements

By Crystal Hsu  /  Staff reporter

The government’s business climate monitor was “yellow-blue” last month for the second consecutive month, dragged by soft shipments in the manufacturing sector, the National Development Council (NDC) said yesterday.

The leading and coincident indices pointed slightly downward, affirming that the pace of recovery has slowed, the council said.

“The latest data showed that the nation’s economy has continued to improve this year, compared with last year, but the pace appears wanting in terms of strength,” NDC Director Wu Ming-huei (吳明蕙) told a media briefing.

The overall monitoring score was 20 last month, one point less than in April, as manufacturing shipments slid into a recession.

The slowdown is related to inventory adjustments by global technology brands ahead of next-generation product launches in the fall, rather than a sign of a downturn in the global economy, analysts have said.

Taiwan is home to the world’s largest contract chipmakers, chip designers and supplier of critical components used in smartphones, laptops, connected vehicles and Internet of Things applications, they said.

The council uses a five-color system to indicate the nation’s economic state, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual-color signs reflect a transition.

With the exception of closing stock prices and electrical and machinery equipment imports, the system’s other constituent indices — money supply, nonfarm payrolls, exports and industrial output — all registered negative cyclical movements, a council report said.

The index of leading indicators, which is used to measure the economic outlook for the next six months, stood at 99.84, a 0.6 percentage point decrease from April, the report said.

Export orders, semiconductor equipment imports and business sentiment contributed to the retreat, it said.

“The government will pay close attention to changes in the economy,” Wu said.

Wu expressed confidence that major bellwethers would improve in the second half of this year with the advent of the high sales season in the summer.

Plans by global technology brands to introduce innovative features in their next-generation products will spur demand, benefiting local firms in their supply chains, Wu said.

The index of coincident indicators, which reflects the current economic condition, last month dropped 1.24 percentage points to 98.8, weight by negative electricity usage; retail and restaurant sales; industrial output; and customs-cleared exports, the report said.

People will spend more money in the summer, Wu said, adding that the government would help boost demand by speeding up the execution of public construction projects.

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