Taiwan's leading economic indicators, which project economic activity over the next three to six months, moved lower from a month earlier in July because of sustained domestic COVID-19 cases, the National Development Council (NDC) said Friday.
The composite index of monitoring indicators, which reflects the existing economic situation, flashed a "red light," however, indicating strong growth, though it fell in July from a month earlier as the domestic outbreak continued, the NDC said.
The leading economic indicators for July fell 0.66 percent from a month earlier to 100.47, marking the sixth consecutive monthly fall, according to the NDC.
In July, the composite index of monitoring indicators fell two points from a month earlier to 38, the lower end of the red light category ranging between 38 and 45, the NDC said.
The NDC uses a five-color system to gauge the country's economic performance, with blue indicating economic contraction, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy and red pointing to an overheating or booming economy.
Wu Ming-hui (???), head of the NDC's Department of Economic Development, said a Level 3 alert imposed to deal with the COVID-19 outbreak in mid-May that remained in effect in July restricted people's movements and hurt consumer sentiment, pushing down the leading indicators.
As a result, among the seven factors that make up the leading indicators, only the sub-index on share price changes moved higher.
The six others -- export orders, money supply, employment, the floor space of new home construction projects, semiconductor equipment imports, and manufacturers' sentiment toward their businesses -- moved lower.
Wu said the decline in the composite index of monitoring indicators largely reflected the weakness of the sub-index on revenue posted by the retail, wholesale, and food and beverage sectors in July as fears over COVID-19 hurt domestic consumption.
The sub-index for those sectors flashed a green light in July, down from a red light in June, according to the NDC.
Among the other eight factors in the composite index, the sub-indexes for the money supply, share price changes, industrial production, merchandise exports, machinery and electrical equipment imports, and sales posted by the manufacturing sector continued to flash a red light in July, the NDC said.
The sub-index for non-farm payroll flashed another blue light, while the sub-index for manufacturers' sentiment toward their businesses continued to flash a yellow-red light.
"While the leading indicators fell in July, the magnitude of decline was narrower compared with previous months as the COVID-19 outbreak came under control," Wu said, referring to a 0.94 drop in May and a 0.86 fall in June.
"As the alert against the disease was eased to some extent in August, it is possible the local economic climate will improve accordingly," Wu added.
Source: Focus Taiwan News Channel