The economic monitoring indicator flashed “red” for a third straight month last month, with the composite score rising to its highest level in more than four years, the National Development Council (NDC) said yesterday.
The composite index climbed one point from a month earlier to 40, the highest since July 2021, remaining in the red zone, ehich signals an overheating economy.
The council uses a five-color system to track the economy. A red light (38-45 points) signals overheating, yellow-red (32-37) indicates a warming economy, green (23-31) suggests stable growth, yellow-blue (17-22) reflects sluggishness and blue (9-16) points to contraction.
Photo: CNA
Of the nine monitoring indicator factors, the sub-index on overtime hours in the industrial and service sectors rose two points to red, driven by strong demand for artificial intelligence (AI) applications and Lunar New Year holiday-related distortions.
The manufacturing business sentiment indicator fell one point to yellow-blue from green, reflecting fewer working days during the holiday period and more cautious views among firms, the council said.
The other seven indicators — the M1B money supply aggregate, revenue in the wholesale, retail and food and beverage sectors, stock price changes, imports of machinery and electrical equipment, merchandise exports, manufacturing sales and industrial production — remained unchanged.
Chen Mei-chu (陳美菊), director of the NDC’s Department of Economic Development, said last month’s score was the highest in more than four years, mainly due to a surge in overtime hours, which swung from a 0.7 percent decline in January to a 13.9 percent increase.
In addition to the tech sector, retail and dining businesses also logged longer hours during the nine-day Lunar New Year holiday last month.
The index of leading indicators and the coincident index, summarizing existing economic conditions, have continued to rise for eight and 16 consecutive months, respectively, signaling sustained momentum, Chen said.
Data for the first two months of the year combined was also strong, with exports surging more than 40 percent year-on-year and growth in industrial production, manufacturing sales, and wholesale and retail activity remaining solid.
Looking ahead, demand tied to global AI development is expected to remain strong, supported by continued capital spending by cloud service providers, while exports of non-tech industries could also improve, Chen said.
However, uncertainties persist, including Middle East tensions and potential new US trade measures, which could weigh on the global outlook, she said.
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