Taiwan's Economic Indicators Show Downtrend Again in June

The total score of the nine indicators on Taiwan's economic growth compiled by the Cabinet-level National Development Council (NDC) in June lost two points from the previous month to 16, reflecting the island's protracted economic downtrend although the score slightly climbed in May.

The nine indicators include TIER manufacturing composite indicator, imports of machinery and electrical equipment, M1B aggregate monetary index, TAIEX average closing price index, industrial production index, index of industrial sales, customs-cleared exports, nonagricultural employment, and turnover of trade and food services industries.

Among the nine indices, only the M1B aggregate monetary and TAIEX average closing price indices remained in the stable 31-23 point range marked by “green” light on the council's graphic scores, whereas the others were either in the 22-17 point transitional range marked by “yellow blue” light or in the 16-9 point sluggish range marked by “blue” light. Accordingly, the total score flashed blue.

The total score once improved to yellow- blue light in May from blue light in April.

NSC officials attribute the June downturn mostly to the declining imports of machinery and electrical equipment as well as TIER manufacturing composite indicator downgrading to yellow-blue light from green light, with each losing one point. However, they point out that imports of capital equipment and semiconductor manufacturing equipment both posted a 10 percent increase.

NSC's statistics also show that the trend-adjusted leading index composed of seven indicators that it compiles had declined for 15 months in a row to 98.13 point in June. However, the pace of decline slowed to 0.31 percent from the previous month after a slowdown in the previous month, suggesting Taiwan's economy could see faster growth in the second half rather than remain sluggish as in the first half.

The seven indicators that make up the total score include building permits, real M1B aggregate monetary, TIER manufacturing sector composite indicator, SEMI book-to-bill ratio, TAIEX average closing price, and net recruitment rate of employees of industry and services.

The NDC statistics forecast the island's economy to improve in the second half based on the steadily climbing leading business indicators in America and Europe, to suggest the two economies are recovering; and new versions of many high-profile consumer electronic products are projected to hit the market to create lucrative business opportunities for Taiwan's contract manufacturers.

The prospect for Taiwan's domestic market in the second half is also cautiously optimistic in consideration of sustained efforts by local enterprises to create new applications for Big Data and Internet of Things (IOT), which is widely seen to be able to energize the private sector's investment on the island. The consumption strength of local households, the council feels, is likely to remain unchanged thanks to typically increased shopping during the summer vacation and the improved job market.