Tue, Oct 29, 2019 - Page 12 News List

Business climate gauge ‘yellow-blue’ for the ninth month

INFLUENCING GDP GROWTH:Electronics suppliers benefited from a high season, but non-tech sectors were not yet out of the woods last month, resulting in a 4.6 percent decrease in exports

By Crystal Hsu  /  Staff reporter

The government’s business climate monitor was “yellow-blue” for the ninth consecutive month last month, albeit with a lower score than in August, weighed down by declines in exports and non-farm payrolls, the National Development Council said yesterday.

The score fell one point to 19, suggesting that the nation’s economic state remains weak, even though the leading and coincident index series pointed modestly upward, the council said.

“Improvement in some indicators was not strong enough and ... the government needs to stay alert for potential headwinds,” council research director Wu Ming-huei (吳明蕙) told a media briefing.

The council uses a five-color system to portray the state of the economy, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition.

Exports, which account for the bulk of GDP growth, last month contracted 4.6 percent after returning to growth in August, as electronics suppliers benefited from a high season, but non-tech sectors were not yet out of the woods.

The Ministry of Finance, which is responsible for compiling export and import data, has said it expects outbound shipments to fall 2 to 3.5 percent this month, due to last year’s high comparison base.

The gauge on non-farm payrolls also fell one point as an economic slowdown started to affect the lagging economic indicator, Wu said.

Non-farm employment last month rose 0.57 percent year-on-year, the weakest increase since October 2016, Wu added.

The leading index series, which aims to project the economic picture for the next six months, inched up 0.11 percent to 101.98, supported by better readings on semiconductor equipment imports, new construction floor areas, stock prices and net accession rates, the council said.

Export orders and narrow monetary measures — meaning cash and cash equivalents — posted negative cyclical movements, it said.

The leading indicator series has advanced for nine months straight, but the total 2.13 percent increase is not evident or strong enough, Wu said.

Global research institutes recently trimmed their growth forecasts for the global economy and trade flows, which are signs to watch out for, although Washington and Beijing reached a temporary agreement over their trade dispute, Wu said.

The coincident index series, which reflects the current economic situation, grew 0.41 percent to 100.43, the council said.

Of the seven constituents, industrial production, export values, wholesale, retail and restaurant revenues rose, while electricity usage and non-farm employment lost steam, it said.

Next-generation smartphones and the deployment of 5G devices and services might give local tech firms a boost, Wu said.

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