Economic monitoring indicator remains red for 8th straight month

Taipei, Aug. 27 (CNA) Taiwan's main business monitoring indicator remained at "red" in July for the eighth consecutive month, as strong artificial intelligence demand continued to support manufacturing and economic growth.

The composite indicator was unchanged from June at 41, while both the leading and coincident indicators continued rising, signaling steady domestic growth momentum, the National Development Council (NDC) said Thursday.

The current streak is the second-longest on record, behind nine consecutive red signals from February to October 2021, NDC data showed.

Under the NDC's five-color system, red indicates a booming or possibly overheating economy, green signals stable conditions and blue represents weakness.

Among the nine components of the business monitoring indicator, manufacturer sentiment improved from green to yellow-red as AI demand pushed its reading from a revised 98.61 to 101.09, the NDC said.

Meanwhile, the M1B money supply component fell from yellow-red to green, partly because of net capital outflows by foreign investors, offsetting the improvement in manufacturer sentiment, according to the council.

The other seven components, including stock prices, industrial production, exports and manufacturing sales, maintained their previous levels, the NDC said.

The trend-adjusted leading indicator rose 0.72 percent from a month earlier to 104.63, with five of its seven components moving higher, including export orders, stock prices and semiconductor equipment imports.

The coincident indicator increased 0.36 percent to 106.80, supported by industrial production, manufacturing sales, business electricity consumption and retail-related sales, NDC data showed.

Looking ahead, exports should continue growing as global cloud service providers accelerate AI infrastructure development and consumer electronics companies enter their stocking season for new products, the council said.

Investment is also expected to expand amid capacity expansions by semiconductor and AI supply-chain companies, as well as greater investment and procurement in Taiwan by international firms, according to the NDC.

Consumption should benefit from a stable labor market, strong corporate profits and recovering automobile demand, the council said.

The NDC nevertheless cautioned that Middle East instability, U.S. trade policy, interest rate shifts in key economies, and global fiscal concerns continue to cloud the outlook.