Economic leading indicators move higher for 9th straight month

Taipei-Taiwan's economic leading indicators, which predict economic performance over the next three to six months, moved higher for the ninth consecutive month in September, the National Development Council (NDC) said Monday.

Taiwan's economic leading indicators for September rose 0.11 percent from a month earlier to 101.98, while its composite index of monitoring indicators for September fell one point from August to 19 and continued to flash a "yellow-blue light," indicating sluggish growth.

Wu Ming-hui (???), head of the NDC's Department of Economic Development, said that although the local economy stayed sluggish, the silver lining was that sentiment toward the near future remained positive, referring to the higher leading indicators.

"But the aggregate growth of the leading indicators over the past nine months has only been 2.13 percent, so they have not shown much strength," Wu said.

"Such movement showed Taiwan's economy is expected to continue to be dictated by global uncertainty and for now that will come from trade issues between the United States and China."

"So fears over any new negative leads from global trade have hurt market confidence," Wu said.

While Washington and Beijing could sign an agreement covering the first phase of trade talks that wrapped up earlier this month, "we have to wait to see the content of the trade pact, and that is causing global economic uncertainty."

Among the seven factors that make up the economic leading indicators, five moved higher in September: manufacturer sentiment, employment, real imports of semiconductor production equipment, floor areas of home starts and equity prices, the NDC said.

But two other factors -- export orders and money supply -- moved lower from a month earlier, the NDC said.

Meanwhile, the September composite index of monitoring indicators fell one point from a month earlier to 19 but stayed in the yellow-blue light category from 17 to 22, according to the NDC.

It was the ninth consecutive month that Taiwan's economy flashed a yellow-blue light.

The NDC uses a five-color system to gauge the country's economic performance, with blue indicating economic recession, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy and red pointing to overheating.

Wu said the continued downtrend in the composite index of monitoring indicators also reflected concerns over the Washington-Beijing trade dispute.

Of the nine factors in the composite index, the sub-indexes on equity prices, industrial production, and business sentiment among manufacturers continued to flash a yellow-blue light, the council said.

Merchandise exports flashed a yellow-blue light in September, compared with a green light in August, while sales generated by the retail, wholesale and food/beverage sectors flashed a yellow-blue light, improving from a blue light in August, the council said.

The sub-index on money supply for September continued to flash a green light and the sub-index on machinery and electrical equipment imports continued to flash a yellow-red light in September.

The sub-index for manufacturing sales continued to flash a blue light for the month and the sub-index for non-farm payrolls suffered a retreat to a blue light from a yellow-blue light, the NDC said.

The NDC said it will continue to closely watch possible further downside risks in the global economy to get a better read on Taiwan's economic future.

Source: Focus Taiwan News Channel