Taiwan's economic gauge stays 'red' for 2nd straight month in January

Taipei, March 9 (CNA) Taiwan's economic monitoring gauge flashed a red light for the second consecutive month in January, signaling an overheating economy, according to data released Monday by the National Development Council (NDC).

The composite index of economic indicators rose one point from a month earlier to 39 in January, remaining in the red zone after hitting 38 in December.

The NDC uses a five-color system to track the economy. A red light (38-45 points) signals overheating; yellow-red (32-37) indicates a warming economy; green (23-31) suggests stable growth; yellow-blue (17-22) reflects sluggishness; and blue (9-16) points to contraction.

Among the nine components that make up the index, the subindex for the money supply aggregate, M1B, rose one point to flash a green light, up from yellow-blue in the previous month, boosted by active stock market trading.

The subindex measuring revenue in the wholesale, retail and food and beverage sectors also rose one point, turning red from yellow-red, benefiting from strong demand for artificial intelligence (AI) applications and pre-Lunar New Year restocking.

However, the subindex tracking overtime hours in the industrial and service sectors fell one point to green from yellow-red, largely due to distortions resulting from the timing of the Lunar New Year holiday.

The remaining six indicators -- stock price changes, imports of machinery and electrical equipment, merchandise exports, manufacturing sales, business sentiment among manufacturers and industrial production -- remained unchanged.

Meanwhile, the trend-adjusted index of leading indicators, which gauges the economy's outlook over the next six months, rose 1.49 percent month-on-month to 105.5 in January.

The coincident indicators index, reflecting the current economic situation, also increased 0.78 percent to 106.4.

Chen Mei-chu (陳美菊), head of the NDC's Department of Economic Development, said both indicators continued to rise, suggesting steady economic growth.

Chen added that traditional industries that had been sluggish -- such as base metals and chemical products -- are also showing signs of improvement.

However, she also cautioned that external uncertainties remain. Changes in U.S. tariff policy after a ruling by the Supreme Court of the United States could create new challenges for Taiwan's traditional industries, while rising geopolitical tensions in the Middle East could push up oil prices and affect market confidence.

Despite the uncertainties, Chen said strong global demand for AI-related hardware is expected to continue supporting Taiwan's exports and production in March.