Fri, Jun 30, 2023 page12

• NDC indicators show export weakness

  ECONOMIC STRUGGLE: Sluggishness in Taiwan’s economy persists, but continued increases in retail and restaurant sales gives cause for cautious optimism, it said

  • By Chen Cheng-hui / Staff reporter
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  The government’s business monitoring indicators last month totaled 12 points, up from 11 points in April and flashing a “blue light” for the seventh consecutive month, the National Development Council (NDC) said in a report yesterday, implying persistent weakness in the nation’s export-reliant economy.

  “Due to sluggish global end-market demand, the economic indicators for domestic industrial production, trade and financial performance, as well as for the manufacturing sector’s business climate remained listless last month,” the council said.

  The recovery of Taiwan’s exports might be later than expected considering the continued declines in major economies’ leading indicators and in the readings of the manufacturing purchasing managers’ index, it said.

  

  “For rent” and “for sale” signs are pictured on storefronts in Kaohsiung yesterday.

  Photo: CNA

  However, the council said the local labor market last month remained stable and domestic demand was also relatively buoyant, while retail and restaurant sales continued to grow, which led to a rebound in non-agricultural employment.

  The council said domestic demand would continue to gain momentum on the back of post-COVID-19-pandemic consumption and the government’s incentive measures, although Taiwan’s economy still faces uncertainties stemming from the implications of interest rate hikes by major central banks and geopolitical factors, it added.

  The council gauges economic health levels and signals them using a five-color index, with “blue” signaling recession, “green” suggesting steady growth and “red” indicating overheating. Dual colors mean economic health levels are in transition.

  Last month’s “blue light” came as the index of leading indicators decreased for a second consecutive month and the index of coincident indicators dropped for the 16th consecutive month, the council said.

  The leading indicators index gauges the economy’s direction in the following six months. It decreased by 0.28 percent month-on-month to 99.46 last month, the report said.

  Among the index’s seven components, the readings on net accession rate of industry and service employees, the manufacturing sector’s business climate and the TAIEX improved from the previous month, it showed.

  The other four components — imports of semiconductor equipment, floor area of building permits, export orders and real M1B money supply — still weighed on the composite index, it showed.

  Last month’s index of coincident indicators, which tracks the pace of economic activity, decreased by 0.21 percent to 92.47, as two of its seven components — non-agricultural employment and exports — made positive contributions, while the other five gauges moved lower from the previous month, the report said, referring to industrial production, shipments, capital equipment imports, power consumption, and retail and wholesale trade.

  Meanwhile, the lagging indicators index decreased by 0.13 percent to 101.64, a third consecutive month of retreat, as the decline in the gauge for manufacturers’ inventories offset gains in four other components, manufacturing unit labor costs, unemployment rate, loans and financial investments, and the overnight rate, the report said.
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