Consumer confidence this month declined, shrinking at a limited pace amid COVID-19 concerns, a survey released yesterday by National Central University showed.
The consumer confidence index was down 1.73 points from a month earlier to 83.93 points, as 32 people have been diagnosed with the virus, including one death, and more than 100,000 others have been quarantined.
The sub-index on stock investment confidence reported the biggest fall of 2.6 points to 65.5 points, holding relatively resilient, compared with drastic drops caused by US-China trade tensions last year, the monthly survey found.
Investor sentiment might fall further as the survey was conducted between Tuesday and Friday last week before stock market slumps on Wall Street and in Taiwan this week, National Central University research center director Dachrahn Wu (吳大任) said.
Exchanges worldwide have fallen after confirmed cases in South Korea and Italy jumped, as COVID-19 continues to spread to other countries.
Local shares could see wild swings next month when companies shed light on the severity of the supply chain disruptions on their revenue for this month and beyond, Wu said.
The employment outlook fell a fractional 0.05 point to 86.65 points, mainly as the job market is a lagging indicator and needs time to show a reaction from the virus, Wu said.
Travel restrictions have slowed the resumption of factory operations in China and created a serious labor shortage, the economist said, adding that the situation could turn around if the virus hurts end-market demand.
Some Taiwanese firms are moving manufacturing bases home from China to avoid tariff hikes on Chinese goods and help bring down unemployment, Wu said.
However, service-oriented companies — such as restaurants, retail stores, hotels and airlines — have suspended or downsized operations to grapple with an abrupt decline in business, which could dim the outlook for the job market next month and in April, Wu added.
The confidence measure on the economy dropped 1 point to 92.85 points, while the reading on household income fell 1.25 points to 96.25 points, the survey showed.
Unpaid leaves, pay cuts and job severances could sap consumer spending, though that has been limited at the moment, Wu said.
The gauge on durable goods purchases weakened 1.2 points to 111.05 points, indicating that Taiwanese remain keen about buying real estate, Wu said.
Most people believe COVID-19 would be contained ahead of summer, as the 2003 SARS outbreak was, and would go ahead with property purchase plans, he said.
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