Consumer confidence this month tumbled to near an 11-year low, as people turned gloomy about household income after the unemployment rate exceeded 4 percent and could further deteriorate with the advent of the graduation season, a survey by National Central University showed yesterday.
The consumer confidence index printed 64.87, falling for the fourth straight month to the weakest level since November 2009, dragged by bleak household income and employment expectations, the survey found.
The sub-index on household income lost 10.5 points to 78.05, while the gauge on the job market outlook shed 10.3 points to 71.5, the worst since April 2010, the survey showed.
The grim sentiment came after the jobless rate spiked to a seven-year high of 4.03 percent last month, meaning the number of unemployed people increased by 36,000 from one month earlier, and another 22,500 were on unpaid leave.
“Unemployment is likely to worsen with the arrival of the graduation season and layoffs on the rise,” said Dachrahn Wu (吳大任), director of the university’s Research Center for Taiwan Economic Development, which conducts the survey.
It is not surprising that people have turned conservative about their economic state, Wu said.
Sentiment readings above 100 indicate optimism, while those below the threshold suggest negative views.
A lagging economic indicator, the jobless rate picked up momentum, even as the COVID-19 outbreak tapered off, with authorities planning to ease social gathering restrictions on Sunday next week.
Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Chu Tzer-ming (朱澤民) told lawmakers yesterday that the economy is expected to bottom out this quarter, and people are actively seeking jobs as evidenced by the steady labor participation.
Even if the economy starts to improve, companies usually wait a bit longer to raise headcount, he said.
Consumer confidence might not recover anytime soon as manufacturers might replace service firms in bearing the brunt of the virus shock if major economies stall, limiting demand for electronics, he said.
That is why the measure on durable goods purchases fell 9.1 points to 88.45, while the reading on economic outlook dropped 7.35 points to 79.05, the economist said.
The sentiment on stock investment softened another 7.2 points to a record low of 36.9, although the TAIEX held firm above the 10,000-point mark, the survey found.
Wu attributed the lack of confidence to volatile global bourses and fund outflows.
The survey conducted between Monday and Wednesday last week over the telephone has a margin of error of 2 percentage points.
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