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Consumer confidence drops in May (update)

2012/05/28 12:39:23

Taipei, May 28 (CNA) Consumer confidence in Taiwan dropped in May, driven by expectations of volatility in the domestic stock market over the next six months, a university survey showed Monday.

The Consumer Confidence Index (CCI), compiled by the Research Center for Taiwan Economic Development at National Central University, fell 1.31 points to 77.61 in May from 78.92 in April. It was the second consecutive month that the index dropped.

Among the six CCI sub-indices, confidence in the job market was the only one to register over 100 points, indicating optimism amid increasing job openings, according to the center.

At 109.95 points, it was also the only index that rose in May from the previous month.

The other sub-indices, which reflect confidence in stock market investments, domestic consumer prices, household finances, durable goods purchase, and the local economy, all lost ground.

Among them, confidence in the stock market showed the biggest decline, falling 5.1 points to 54, in the second consecutive monthly decline.

Analysts said the drop was a reaction to major volatility in the domestic and global stock markets in recent months and uncertainty over the European debt crisis.

In addition, a government proposal to introduce a capital gains tax on stock investments was also a factor, analysts said.

Consumers are expected to remain pessimistic about the stock market's prospects in the months ahead, particularly if the transaction volume shrinks further, according to analysts.

Meanwhile, the sub-index of durable goods purchase confidence showed the second sharpest drop of 2.55 points, falling to 88.85 points.

Domestic economic outlook fell 1.4 points, household finances 1.35 points, and durable goods and consumer prices 0.5 points, the survey showed.

The May index was based on a survey of 2,432 people over the age of 20. It was conducted May 19-21 and had a margin of error of plus or minus 2 percentage points.

The index also coincided with the Purchasing Managers' Index for China in May, before Taiwan lowered its 2012 economic growth forecast from 3.38 percent 3.03 percent.

(By James Lee)