| Chinese | Home |  
Home / Monthly


2016.11.25
Steady global conditions fuel the engines of recovery
TIER composite indicators present rather optimistic signs for the near future

The Taiwanese Economy in October 2016

World major economies' economic performances of the 3rd quarter this year have been released one after the other in October 2016. Almost all of them have outperformed the 1st and 2nd quarter meaning the global economic conditions are on the rather steady track. Hopefully, such a momentum can help pave the way for engines of global recovery. As the Taiwanese economy and the state of world business environments are highly correlated, the composite indicators issued by the Taiwan Institute of Economic Research (TIER) in October 2016 also present rather optimistic signs for the near future.
Taiwan's exports in October 2016 increased by 9.40% compared with the same month last year. Regarding imports, Taiwan's imports in October increased by 19.55% compared with imports in October 2015, and the ratio of increase has been the highest since January 2013. From January 1 to October 31 this year, Taiwan's exports and imports gave a trade surplus of US$ 40.33 billion or a decrease by 3.59% on a y-o-y basis.
Taiwan's consumer price index (CPI) went up by 1.70% in October 2016 compared with the same month of previous year. The current inflation rate has turned much higher compared with previous months. The core inflation rate stood at a more tepid ratio as 0.96% in October, 2016. In addition, the wholesale price index (WPI) tumbled by 1.88% in October on the year-on-year basis. From a cumulative perspective, the CPI went up by 1.30% and WPI went down by 3.71% from January 1 till October 31 this year on the year-on-year basis.
The unemployment rate in October stood at 3.95% representing a 0.05 percentage points decrease compared with the previous month. The current unemployment rate is considered at a more acceptable level. Because unemployment rate is a lag indicator, which in a way has reflected that economic recovery since Q2 this year. The salary on average from January till the end of September stood at NT$ 47,853 or 1.01% less compared with the averaged salary in the same period last year.
As for exchange rate, the NTD went somewhat weaker due to the relatively stronger USD. The NTD versus USD stood at 31.587 vs. 1 in late October 2016 indicating a mild depreciation. As the US Federal Reserve is very likely to conduct a rate hike by turning its tone to more hawkish, the greenback has gone stronger recently. Fed's decision in the near future meetings may add further uncertainties to the dithering global business outlook. Regarding the interest rate, it remained low and steady in October due to the continued loose monetary operations by the CBC.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 32.0% or increased by 11.8% compared with respondents who perceiving better business in the previous month. The portion of those perceived business were getting worse in the target month was 19.7% or decreased by 11.6 percentage points than 31.3% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 48.30% or decreased by 0.1 percentage points compared with 48.4% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was rather optimistic.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 24.4% in the target month or increased by 2.9 percentage points than 21.5% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 20.1% or increased by 0.1 percentage points compared with 20.0% feeling rather pessimistic about the future in the previous month. The portion of manufacturing firms who perceived business remained constant in the next six months stood at 55.4% or decreased by 3.1 percentage points compared with 58.5% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was somewhat neutral to slightly optimistic.
The manufacturing Composite Indicator for October, 2016 adjusted for seasonal factors on moving average, saw a mild upward correction, and from a revision of as 97.43 points in September 2016 moved up to 98.08 points. Figure 1 shows an increase of 0.65 points, the first increase after two-month consecutive decline.
The TIER Service Sector Composite Indicator for October 2016 adjusted for seasonal factors on moving average also saw an upward correction and from a revision of 87.02 points in September 2016 went up to 89.94 points. Figure 1 shows an increase of 2.92 points, the third-month rise.
In addition, the TIER Construction Sector Composite Indicator for October 2016 adjusted for seasonal factors on moving average, however saw a downward correction, and from a revision of 87.53 points in September 2016 went down to 86.18 points. Figure 1 shows a decrease of 1.35 points, the first decline after a one-month rise.

Forecast on Individual Industries

Following are manufacturers' sentiments that are industry-specific in the monthly TIER surveys:

Manufacturers' sentiments that have been in decline in the October survey and are expected to deteriorate over the next six months include:
Rubber Products Manufacturing, Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Basic civil structure construction, Securities.
 
Manufacturers' sentiments that have been in decline in the October survey, but are expected to improve over the next six months include:
None.
 
Manufacturers' sentiments that have been in decline in the October survey and are expected to remain sluggish over the next six months include:
Textiles Mills, Yarn Spinning Mills, Leather, Fur and Allied Product Manufacturing, Fabricated Metal Products Manufacturing, Metal dies, Screw, Nut Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Communications Equipment and Apparatus Manufacturing, Insurance.
 
Manufacturers surveyed who felt the October outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Petrochemicals Manufacturing, Man-made Fibers Manufacturing, Transport Equipment Manufacturing and Repairing, Construction, Restaurants and hotels.
 
Manufacturers surveyed who felt the October outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Electrical Appliances and Housewares Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Precision Instruments Manufacturing, Education and Entertainment Articles Manufacturing.
 
Manufacturers surveyed who felt the October outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Food, Slaughtering, Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking , Prepared Animal Feeds Manufacturing, Fabric Mills , Apparel, Clothing Accessories and Other Textile Product Manufacturing , Wood and Bamboo Products Manufacturing, Paper Manufacturing, Printing, Industrial Chemicals, Glass and Glass Products Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and tools Manufacturing, Industrial Machinery, Electrical Machinery, Electric Wires and Cables Manufacturing, Electronic Machinery, Electronic Parts and Components Manufacturing, Motor Parts Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Wholesale, Banks, Telecommunication services, Transportation and storage.
 
Manufacturers' sentiments that have improved in the October survey and is expected to deteriorate over the next six months include:
Chemical Products Manufacturing, Motor Vehicles Manufacturing.
 
Manufacturers' sentiments that have improved in the October survey and is expected to remain upbeat over the next six months include:
Petroleum and Coal Products Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Iron and Steel Basic Industries.
 
Manufacturers' sentiments that have improved in the October survey and the trend is expected to continue for the next six months include:
Soft Drink Manufacturing , Plastics and rubber raw materials, Audio and Video Electronic Products Manufacturing, Real estate investment, Retail sales.

 

 

 
topˆ