The government’s business climate monitor stayed “green” last month, indicating a stable economy, although the overall score shed 2 points because of increasing external challenges, the National Development Council said on Thursday.
“The escalating trade conflict between the US and China is weakening local business confidence, although the economy at home and abroad remains on a course of expansion,” NDC research director Wu Ming-huei (吳明蕙) told a media briefing.
The overall business climate gauge eased to 24, as the readings on manufacturing sentiment and industrial output both shed 1 point, the council’s report showed.
Neither the US nor China appears willing to soften their stance on the trade dispute and the standoff has cast a shadow on the business outlook of local exporters, Wu said.
The council uses a five-color system to indicate the nation’s economic condition, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual-color signs reflect a transition.
The latest manufacturing sentiment gauge compiled by the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) corresponded with the observation, with the index sliding to 12.14 last month from 12.44 in July, the Taipei-based think tank said in a report yesterday.
The retreat kept manufacturing confidence in a “yellow-blue” mode, suggesting sluggishness, despite robust external demand for electronic components and machinery equipment, the backbone of Taiwanese exports, the institute said.
A high base last year and uncertainty over the trade row prompted local exporters to turn conservative, it said.
The government’s index of leading indicators, which seeks to capture economic activity six months ahead, came in at 101.39 last month, down 0.09 percent from July, the NDC report said.
The sub-indices on capital equipment imports, monetary supply and net employment advanced, while export orders, manufacturing sentiment, stock prices, and building permits and floor space saw negative cyclical movements, the council said.
The index of coincident indicators, which reflects the current economic state, pared 0.26 percent to 99.82, it said.
Only the readings on imports of machineries and electrical equipment ,as well as wholesale, retail and restaurant revenues picked up, it said.
The sub-indices on exports, power consumption, industrial output, manufacturing shipments and non-farm payroll declined, the council said.
“The pace of economic improvement leaves room for improvement and confidence plays a critical role in setting future movements,” it said.
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