The local service sector flashed “yellow-blue” in June, signaling sluggish growth for the eighth consecutive month, according to the Commerce Development Research Institute (CDRI, 商業發展研究院).
Citing a survey, the institute said the Index of the Service Industry (ISI) was 95 in June, one point below the institute’s forecast.
It said the slow growth was due mainly to continued weak global demand, which has affected the domestic wholesale industry.
Although beverage sales and department store chains’ anniversary sales boosted the local retail sector in June, the weakness of the wholesale industry compromised the performance of the entire service sector in the month, the institute said.
The think tank uses a five-color system, coupled with the ISI, to describe the climate of the local service sector, focusing on three major segments: securities trading; the labor market and wages; and business operations.
“Red” signals overheating, “yellow-red” indicates slight overheating, “green” represents steady growth, “yellow-blue” signals sluggishness and “blue” indicates a recession.
“Yellow-blue” ranges between 93 points and 99 points.
The institute said Taiwan’s exports in June fell from a year earlier for the 17th consecutive month, recording the longest slump in the nation’s history.
In the three major segments of the ISI, securities trading and the labor market pointed to an improvement in June, while business operations showed signs of weakening, the institute said.
Meanwhile, the subindex for business operations fell four points from a month earlier to 96, as sales among technology service firms dropped and cargo deliveries via land transportation declined in June, the institute said.
In addition, a drop in power consumption, the number of flights handled by airports in Taiwan and the ratio of newly established firms to closed firms also weakened the business climate, the institute said.
However, the subindex for securities trading edged up by 1 point from a month earlier to 98 on a higher equity market, as the weighted index on the main board rose 1.53 percent in June, the think tank said.
The subindex for the labor market rose 1 point to 100 in June from the previous month, as hiring, average wages and average overtime hours increased, the institute said.
An increase in consumption during the summer vacation and a booming tourism sector are expected to boost the local service sector last month and this month, the institute said.
It forecast an ISI of 97 and 98 points respectively for the two months, but said the service sector will still flash “yellow-blue.”
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