The government’s business climate monitor last month showed “yellow-blue” for the fifth straight month, with the domestic economy stalled amid the COVID-19 pandemic, although it is starting to show signs of improvement, the National Development Council (NDC) said yesterday.
“Though the gauge continued to point to a slowdown, the total score gained 2 points, rising to 21 from 19, suggesting that the economy is improving,” council research director Wu Ming-huei (吳明蕙) told a media briefing in Taipei.
The council uses a five-color spectrum to portray the nation’s economic landscape, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition.
Component measures of the TAIEX, and imports of machinery and electrical equipment improved, while the reading on industrial production dropped, the council said.
The remaining five subindices were steady, it said.
Imports of capital equipment rose 13.2 percent year-on-year last month to US$4.07 billion as local semiconductor firms sought to upgrade their technologies to meet demand, government data showed.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on July 16 increased its planned capital expenditure this year by US$1 billion, citing demand from 5G infrastructure deployment and high-performance computing applications.
TSMC, the world’s largest contract chip maker whose customers include Apple Inc, Advanced Micro Devices Inc, Qualcomm Inc and Nvidia Corp, has purchased four plots of land in Taiwan so far this year to accommodate new facilities.
The index of leading indicators, which predicts the economic situation for the following six months, increased 1.23 percent to 102.39, its third straight month of gains, on the back of improved export orders, business sentiment and labor accession rates, the council said.
However, the pickup is not even or fast enough to suggest a recovery, Wu said, adding that business at non-tech firms remained sluggish.
It would be safer to bet on a recovery when the cumulative improvement exceeds 5 percent, remains so for five straight months and encompasses most sectors, she said.
The index of coincident indicators, which reflects the current economic situation, weakened 0.1 percent to 98.79, weighed by unfavorable non-farm payrolls, overall power consumption and industrial output, the council said.
Until the global pandemic stabilizes, uncertainty would continue to disrupt life and haunt manufacturing and business activity, Wu said.
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