Taiwan’s economic indicator turned green last month for the first time in 14 months, indicating a modest cooling as weaker car sales and a pullback in consumer activity tempered broader momentum, the National Development Council (NDC) said yesterday.
The composite score dropped by two points to 31, shifting the indicator from “yellow-red” to “green,” signaling a more modest pace of expansion. The downtick was primarily attributed to lower revenue in wholesale, retail and food services, along with a sharp drop in car registrations, Department of Economic Development Deputy Director Chen Mei-chu (陳美菊) said.
“While the shift doesn’t point to a sharp downturn, the drop in car sales is clearly dampening sentiment,” Chen said.
Photo: CNA
New vehicle registrations fell 23.1 percent year-on-year, despite May typically being a peak delivery month.
Wholesale revenue, which accounts for nearly 70 percent of the sector, fell 16.8 percent year-on-year, while retail sales, which make up 25.8 percent, dropped 18 percent, the council said. Tariff uncertainty and murky economic prospects appear to be causing consumers to hold off on big-ticket purchases, Chen said.
The index of leading indicators, which forecasts economic conditions over the next six months, decreased 0.8 percent to 99.74, weighed down by weakening export orders, manufacturing sentiment, equity markets and construction activity.
In contrast, the coincident index, which reflects current economic performance, rose 1.88 percent to 109.55, driven by strong factory output, robust exports and higher business power consumption.
“The data suggest that Taiwan is on a stable, but cautious growth trajectory,” the council said, adding that solid manufacturing performance is masking a cooling in consumer demand.
The next few months would be crucial in determining whether the green light signals stabilization or the start of a broader slowdown, Chen said.
Separately, Taiwan’s Consumer Confidence Index (CCI) dropped 1.23 points to 63.7 this month, its lowest level in more than a year, according to a National Central University (NCU) survey released yesterday.
All six subindices saw declines, a rare occurrence typically observed only during major shocks such as the 2018 US-China trade dispute or the onset of the COVID-19 pandemic, NCU economics professor Dachrahn Wu (吳大任) said.
“The dual pressures of an appreciating New Taiwan dollar and tariff-related uncertainty are weighing heavily on exporter sentiment and could eventually affect hiring,” Wu said.
Yau Ruey (姚睿), another NCU economics professor, said that Taiwan’s economic structure makes it particularly vulnerable to external shocks.
Just 870,000 workers — 7.5 percent of the workforce — are employed in high-tech industries such as electronics, computers and optics.
In comparison, more than 2 million people work in traditional manufacturing, while more than 7 million, — about 60 percent of the workforce — are employed in the service sector, Yau said.
“Taiwan’s reliance on small and medium-sized businesses makes the economy especially sensitive to cost shocks, given their limited pricing power and lack of currency hedging tools,” Yau added.
The number of Taiwanese working in the US rose to a record high of 137,000 last year, driven largely by Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) rapid overseas expansion, according to government data released yesterday. A total of 666,000 Taiwanese nationals were employed abroad last year, an increase of 45,000 from 2023 and the highest level since the COVID-19 pandemic, data from the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed. Overseas employment had steadily increased between 2009 and 2019, peaking at 739,000, before plunging to 319,000 in 2021 amid US-China trade tensions, global supply chain shifts, reshoring by Taiwanese companies and
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) received about NT$147 billion (US$4.71 billion) in subsidies from the US, Japanese, German and Chinese governments over the past two years for its global expansion. Financial data compiled by the world’s largest contract chipmaker showed the company secured NT$4.77 billion in subsidies from the governments in the third quarter, bringing the total for the first three quarters of the year to about NT$71.9 billion. Along with the NT$75.16 billion in financial aid TSMC received last year, the chipmaker obtained NT$147 billion in subsidies in almost two years, the data showed. The subsidies received by its subsidiaries —
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