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2016.12.23
Major economies adjust Q3 economic performance upward
Taiwan economy tends to benefit from stronger global demand

The Taiwanese Economy in November 2016

Major economies in the world such as the US, Euro zone, and Japan adjusted the Q3 economic growth all together. As the Taiwanese economy and the state of world business environments are highly correlated, the stronger global demand has helped fuel up Taiwan's economic outlook.
Taiwan's exports in November 2016 increased by 12.07% compared with the same month last year. Regarding imports, Taiwan's imports in November increased by 2.98% compared with imports in November 2015. From January 1 to November 30 this year, Taiwan's exports and imports gave a trade surplus of US$ 44.60 billion or a decrease by 3.98% on a y-o-y basis.
Taiwan's consumer price index (CPI) went up by 1.97% in November 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 0.84% in November, 2016. In addition, the wholesale price index (WPI) tumbled by 0.28% in November on the year-on-year basis. From a cumulative perspective, the CPI went up by 1.36% and WPI went down by 3.39% from January 1 till November 30 this year on the year-on-year basis.
The unemployment rate in November stood at 3.87% representing a 0.08 percentage points decrease compared with the previous month. The current unemployment rate is considered at a more acceptable and reasonable level. Because unemployment rate is a lag indicator, which in a way has reflected that economic recovery since Q2 this year. The real earning on average from January till the end of October stood at NT$ 47,076 or 1.03% 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 31.89 vs. 1 in late November 2016 indicating a mild but continuous depreciation. As the US Federal Reserve conducted a rate hike on December 15 and is very likely to conduct a rate hike next year by turning its tone to incessant hawkish, the greenback has gone stronger persistently. 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 November 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 35.2% or increased by 3.9% 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 19.3% or decreased by 2.3 percentage points than 21.6% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 45.5% or decreased by 1.6 percentage points compared with 47.1% 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 18.4% in the target month or decreased by 5.0 percentage points than 23.4% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 20.3% or increased by 0.1 percentage points compared with 21.2% 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 60.3% or increased by 4.8 percentage points compared with 55.5% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was somewhat neutral.
The manufacturing Composite Indicator for November, 2016 adjusted for seasonal factors on moving average, saw a mild upward correction, and from a revision of as 97.69 points in October 2016 moved up to 99.06 points. Figure 1 shows an increase of 1.37 points, the second month of consecutive increase.
The TIER Service Sector Composite Indicator for November 2016 adjusted for seasonal factors on moving average also saw an upward correction and from a revision of 89.89 points in October 2016 went up to 90.82 points. Figure 1 shows an increase of 0.93 points, the fourth-month rise.
In addition, the TIER Construction Sector Composite Indicator for November 2016 adjusted for seasonal factors on moving average, however saw a downward correction, and from a revision of 85.96 points in October 2016 went down to 84.19 points. Figure 1 shows a decrease of 1.77 points, the second month of consecutive decline.

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 November survey and are expected to deteriorate over the next six months include:
Apparel, Clothing Accessories and Other Textile Product Manufacturing , Man-made Fibers Manufacturing.
   
● Manufacturers' sentiments that have been in decline in the November survey, but are expected to improve over the next six months include:
Electrical Appliances and Housewares Manufacturing.
   
● Manufacturers' sentiments that have been in decline in the November survey and are expected to remain sluggish over the next six months include:
Yarn Spinning Mills, Leather, Fur and Allied Product Manufacturing, Motorcycles Manufacturing.
   
● Manufacturers surveyed who felt the November outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Petrochemicals Manufacturing, Plastic Products Manufacturing, Glass and Glass Products Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Construction, Basic civil structure construction, Restaurants and hotels.
   
● Manufacturers surveyed who felt the November outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Petroleum and Coal Products Manufacturing, Cement and Cement Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing.
   
● Manufacturers surveyed who felt the November outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Food, Frozen Food Manufacturing, Textiles Mills, Fabric Mills , Wood and Bamboo Products Manufacturing, Industrial Chemicals, Machinery and Equipment Manufacturing and Repairing, Cutlery and tools Manufacturing, Industrial Machinery, Electronic Machinery, Communications Equipment and Apparatus Manufacturing, Electronic Parts and Components Manufacturing, Retail sales, Wholesale, Banks, Securities, Telecommunication services, Transportation and storage.
   
● Manufacturers' sentiments that have improved in the November survey and is expected to deteriorate over the next six months include:
Chemical Products Manufacturing, Rubber Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Motor Vehicles Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing.
   
● Manufacturers' sentiments that have improved in the November survey and is expected to remain upbeat over the next six months include:
Non-metallic Mineral Products Manufacturing, Precision Instruments Manufacturing, Insurance.
   
● Manufacturers' sentiments that have improved in the November survey and the trend is expected to continue for the next six months include:
Slaughtering, Edible Oil Manufacturing, Flour Milling and Grain Husking , Soft Drink Manufacturing , Prepared Animal Feeds Manufacturing, Paper Manufacturing, Printing, Plastics and rubber raw materials, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal dies, Screw, Nut Manufacturing, Electric Wires and Cables Manufacturing, Audio and Video Electronic Products Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Parts Manufacturing, Motorcycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Real estate investment.

 

 

 
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