Consumer confidence reaches highest level in over 4 years

Taipei, Aug. 27 (CNA) Consumer confidence rose to a new high in more than four years in August as the local stock market's significant rebound helped reinforce consumer faith in the local economy, National Central University (NCU) said Tuesday.

Citing a survey conducted during Aug. 18-21, NCU said the local CCI rose 2.39 points from a month earlier to 77.75, the highest since March 2020, when the index stood at 78.51.

The CCI gauges peoples' confidence in consumer prices, the local economic climate, the stock market, the likelihood of purchasing durable goods, employment prospects and family finances over the next six months.

Speaking with reporters, NCU Economic Research Center director Dachrahn Wu (吳大任) said the local stock market staged a significant rebound earlier in the month following a plunge due to volatility in the global markets. This quick comeback restored the confidence of many investors, Wu added.

In early August, the Taiex, the weighted index on the Taiwan Stock Exchange, took a beating, plunging 2,811.22 points, or 12.42 percent below the 20,000 point mark, in just two trading sessions -- Aug. 2 and Aug. 5 -- amid concerns over a possible recession in the United States.

However, the Taiex soon started to regain its footing, soaring 2,577.38 points or 13.11 percent from an intraday low of 19,662.74 seen on Aug. 6 to close at 22,240.12 on Monday.

As a result, the sub-index on the stock market rose sharply by 2.46 points from a month earlier to 59.02 in July, according to the survey.

Along with a booming home market, Wu said the stock market gains gave consumers the sense their wealth was growing which offset the impact of rising consumer prices.

In July, the sub-index on consumer prices rose 4.47 from a month earlier to 42.88, the highest since March 2021, when the sub-index hit 43, the survey found.

In line with the CCI, the sub-index on family finances moved higher by 3.0 from a month earlier to 85.89 in July, and the sub-index on the local economic climate also rose 2.88 from a month earlier to 90.26. Both of the sub-indexes hit a new high in more than three years, the survey showed.

The sub-index on employment rose 3.9 from a month earlier to 79.13 in July, while the sub-index on the purchases of durable goods bucked the upturn and fell 2.34 from a month earlier to 109.33, the survey indicated.

Wu said the local economy has faced two major downside risks in the second half of this year, citing a possible slowdown in the U.S. economy as one of the two, as it could affect Taiwan's exports.

Wu said the other uncertainty would be the benefits of artificial intelligence development being below market expectations. This could become a financial burden for many enterprises and affect the economy in the second half of the year.

Many investors are waiting for an investor conference scheduled by U.S.-based AI chip designer Nvidia Corp. for Wednesday U.S. time and the release of its second-quarter results and guidance for the third quarter.

In NCU surveys, a CCI sub-index score of 0-100 indicates pessimism, while a score of 100-200 shows optimism, the university said, noting that the only factor that showed optimism in August was the likelihood of purchasing durable goods over the next six months.

Also in August, another NCU survey conducted jointly with Taiwan Realty showed a month-on-month rise of 0.67 points in the index for home buying, which stood at 106.33.

The university's CCI survey in July collected 3,158 valid questionnaires from consumers in Taiwan aged 20 and over. It had a confidence level of 95 percent and a margin of error of plus or minus 2.0 percentage points.