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2017.12.25
US tax reform adds fuel to American economic growth engines
Taiwan's growth in November exports is exceptionally strong

The Taiwanese Economy in November 2017

The US and European economy both have had in recovering mode quarter by quarter this year. The Cabinet Office of Japan recently revised its estimate in growth in 2017 as well as forecast in growth in 2018 by 0.4 percentage points given its current longest recovery track after the global financial crisis. China's consumption and investment continue to perform well with respect to its supply side structural reform. The steadily increasing global demand has helped Taiwan's economy pick up its growth in exports in November 2017.
Taiwan's exports in November 2017 increased significantly by only 14.03% compared with the same month of 2016 that would also be the 14th month of positive growth in exports. Regarding imports, Taiwan's imports in November 2017 increased by 9.04% compared with imports in November 2016. Exports and imports grew by 13.06% and 12.59% y-o-y respectively from January 1st till the end of November this year, Taiwan's exports and imports gave a trade surplus of US$ 51.74 billion or an increase by 15.26% on a y-o-y basis during this period.
Taiwan's consumer price index (CPI) went up by only 0.35% in November 2017 compared with the same month of previous year. The core inflation rate stood at 1.30% in November, 2017. In addition, the wholesale price index (WPI) moved up by 1.57% in November 2017 on the year-on-year basis. On the cumulative basis, the CPI and WPI went up by 0.57% and 0.95% respectively compared with the same period of last year.
As for exchange rate, the NTD went somewhat stronger due to the relatively weaker USD, as the Fed had sent out its certain dovish messages. Anyway, the NTD/USD stood at 30.01 in late November 2017 indicating a 0.53% appreciation. Regarding the interest rate, it remained low and steady in November 2017 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading and relatively strong NTD; the lowest and highest over-night call rate in November 2017 stood at 0.171% and 0.183% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 23.8% or decreased by 3.0 percentage points 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 21.7% or decreased by 4.5 percentage points than 26.2% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 54.5% or increased by 7.5 percentage points compared with 47.0% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was neutral.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 19.2% in the target month or decreased by 2.2 percentage points than 21.4% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 17.0% or decreased by 1.7 percentage points compared with 18.7% 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 63.7% or increased by 3.8 percentage points compared with 59.9% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was also quite neutral.
The manufacturing composite indicator for November, 2017 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 100.58 points in October moved down to 99.49 points in November that would be the third month consecutive drop. Figure 1 shows a decrease of 1.09 points.
The TIER service sector composite indicator for November 2017 adjusted for seasonal factors on moving average, also saw a downward correlation, and from a revision of as 90.47 points in October moved down to 90.12 points in November that would also be the third month consecutive drop. Figure 1 shows a decrease of 0.35 points.
In addition, the TIER Construction Sector Composite Indicator for November 2017 adjusted for seasonal factors on moving average saw an upward correction, and from a revision of 93.69 points in October went up to 100.15 points in November. Figure 1 shows an increase of 6.46 points, the first mount after a one-month drop.

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

 

 

 
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