Taipei-Local confidence in Taiwan's economy continued to weaken in January on a slew of disappointing economic data, according to a recent survey released by Cathay Financial Holding Co.
The survey found that 17.1 percent of respondents said the economy had improved from six months earlier, while 49.7 percent said it had worsened, Cathay Financial said.
These figures translated into an economic optimism index over the next six months of minus 32.7 in January, down from minus 27.6 in a similar poll conducted in December, Cathay Financial said.
The cautious mood came after the composite index of monitoring indicators for November, released by the National Development Council (NDC) in late December, fell five points from a month earlier to 17, the lowest level since March 2016, when the index stood at 16.
The NDC survey flashed a "yellow-blue" light for the third consecutive month, signaling sluggishness, but the November index was at the lower end of the "yellow-blue" range of 17 to 22, coming close to a "blue light," which would have represented contraction.
The cautious sentiment also reflected continued weakness in manufacturing activity, as the Purchasing Managers' Index (PMI) for December fell to 44.8, the lowest score ever registered by the index in Taiwan since it was introduced in July 2012.
Any PMI reading below 50 is considered to indicate contraction.
In addition, the optimism index for current economic conditions moved lower to minus 19.3 in January, down from minus 1.9 in December, Cathay Financial said.
The caution over the prospects for Taiwan's economy led to a downbeat view of Taiwan's labor market over the next six months, with the optimism index falling to minus 32.9 in January from minus 29.6 in December.
The optimism index for the current labor market also fell from minus 17.7 in December to minus 29.4 in January, Cathay Financial said.
Weaker confidence in the broader economy and job market led to more reluctance among respondents to spend money on expensive goods.
The indexes gauging the willingness to purchase durable goods and to buy big ticket items were down from minus 17.2 and positive 4.6 in December, respectively, to minus 19.9 and minus 1.7 in January, Cathay Financial said.
In addition to the disappointing macroeconomic data, Cathay Financial said, weaker than expected global iPhone sales prompted stock investors to became wary of the movement of the stock market after a volatile December.
According to the survey, the local optimism index for the stock market fell from minus 14.1 in December to minus 33.5 in January, while the index gauging investors' appetite to take risks fell from minus 9.1 to minus 14.2.
Cathay Financial said the gross domestic product (GDP) growth for Taiwan in 2019 expected by respondents averaged 2.2 percent, down from 2.3 percent seen in a similar poll in December, indicating investors appear more cautious than the government.
At the end of November, the Directorate General of Budget, Accounting and Statistics lowered its forecast for Taiwan's 2019 GDP growth by 0.14 percentage points to 2.41 percent.
The survey results, conducted during Jan. 1-7, were based on 16,833 valid online questionnaires filled out by clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.
Source: Focus Taiwan News Channel