Taiwan economy stable in Nov; leading indicators continue rising

Taipei-Taiwan's economy has become stable in November on the back of higher domestic investment and a booming equity market, as well as reduced concerns over global trade, the National Development Council (NDC) said Friday.

Another positive sign was that the country's leading indicators, which predict economic performance over the next three to six months, continued to move higher, marking the 11th consecutive month of growth, the NDC said.

The composite index of monitoring indicators for November rose to 24 points from a revised 19 recorded in October, representing a green light and pointing toward stable performance, according to data compiled by the NDC, Taiwan's top economic planning agency.

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.

It was the first time the composite index had returned to the green light category -- which ranges between 23 and 31 -- since September 2018, from either sluggishness or contraction.

Wu Ming-hui (???), head of the NDC's Department of Economic Development, told reporters that the higher score in the composite index was largely the result of an improvement in industrial production, exports and higher equity prices in the month, while manufacturers' faith in the business climate also grew.

Out of the nine factors in the composite index, the sub-index on equity prices flashed a red light in November, improving from a yellow-red light in October, after the weighted index on the Taiwan Stock Exchange continued to move higher on the back of strong foreign institutional buying, the NDC said.

The sub-indexes on industrial production, merchandise exports, and the business sentiment of the local manufacturing sector flashed a yellow-blue light in November, compared with a blue light in October, the NDC added.

The sub-index on imports of machinery and electrical equipment improved to a red light in November from a yellow-red light a month earlier, indicating that domestic investment increased as Taiwanese exporters invested at home to avoid the impact of the Washington- Beijing trade friction, the data showed.

The NDC said the sub-indexes on sales generated by the manufacturing sector, and revenue posted by the retail, wholesale and food/beverage industries continued to flash a yellow-blue light in November.

The sub-index on the money supply flashed another green light in November, while the sub-index on non-farm payrolls continued to flash a blue light, the NDC said.

In November, the leading indicators rose 0.36 percent from a month earlier to 102.62, the NDC data showed.

However, over the past 11 months, Wu said, the leading indicators rose only 2.92 percent, so the momentum was not particularly strong.

Among the seven factors of the leading indicators, the sub-indexes on semiconductor equipment imports, export orders, equity prices and employment moved higher in November, the NDC said.

On the other hand, the sub-indexes on the size of floor areas in new construction projects, business sentiment in the manufacturing sector, and the money supply moved lower in November, the NDC added.

Despite a green light in December, Wu said, the score in the composite index stayed closer to the lower end of the category, so more time is needed to observe the economic situation.

Wu said nonetheless that with more and more Taiwanese firms willing to invest at home and the semiconductor industry keen to upgrade its production processes, she was willing to remain upbeat.

She also noted that while Washington and Beijing will sign a so-called phase-one trade agreement, few can be sure about the exact content of the accord, which could continue to create uncertainty over global trade.

Source: Focus Taiwan News Channel