Taiwan's economic leading indicators up for 4th straight month

Taipei, Aug. 29 (CNA) Taiwan's leading indicators, which gauge the economic climate over the next three to six months, rose in July for a fourth consecutive month as the adverse effects of COVID-19 seem to be easing, according to the National Development Council (NDC).

The composite index of monitoring indicators, which reflects the existing economic situation, also rose from a month earlier, but not enough to indicate that the economy had pulled out of its recent sluggishness, said the NDC, Taiwan's top economic planning agency.

In July, the leading indicators rose 1.23 percent from a month earlier to 102.39, the highest rate of growth of any month during the index's recent four-month climb.

Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development, said the leading indicators' index rose 3.09 percent during the climb and has continued to gain strength, indicating better prospects ahead with the economic blow from COVID-19 easing.

Among the seven factors in the leading indicators, six rose and only one -- imports of semiconductor production equipment -- fell.

The six factors that gained ground were export orders, business sentiment among manufacturers, employment in the local industrial and service sectors, money supply, share prices, and the amount of floor area in new construction projects.

The NDC said the composite index of monitoring indicators rose two points in July from a month earlier to 21, moving closer to the higher end of the 17-22 range for the "yellow-blue light" category, which indicates a sluggish economy.

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 overheating.

Of the nine factors in the composite index, the sub-indexes for the change in share prices and imports of machinery and electrical equipment flashed a yellow-red light in July, changing from a green light in June, the NDC said.

In July, the sub-index for the money supply flashed another yellow-red light, the NDC said.

The sub-indexes for sales posted by the manufacturing sector and revenue generated by retailers and wholesalers continued to flash a blue light in July, the NDC said.

The NDC said the sub-index for industrial production flashed a yellow-blue light in July, compared with a green light in June, while the sub-index for business sentiment among manufacturers improved to a yellow-blue light, from a blue light in June.

In addition, the sub-indexes for non-farm payroll and merchandise exports continued to flash a blue light in July, the NDC said.

Despite the rise in the leading indicators and composite index in July, Wu said more evidence was needed to be sure the economy is recovering.

Wu said the leading indicators must rise at least five months in a row with aggregate growth topping 5 percent and no fewer than six factors in the composite index improving before the economic recovery trend becomes clear.

Wu cautioned that uncertainty remained because of the global pandemic as the number of confirmed cases continue to rise worldwide, and said the top priority at present is to bring the disease under control.