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2017.10.25
The IMF global outlook of this year could be more optimistic
TIER's manufacturing and service composite indicators slowed down lately

The Taiwanese Economy in September 2017

The second quarter performance of the US economy and European economy remained as steady. The third quarter data of China was released and the readings were better than the Market would have expected. It is true that the improving global conditions could have helped fuel Taiwan's industrial production and exports. However, the relatively lower base effect has subsided. Consequently, the manufacturing and service composite indicators issued by the Taiwan Institute of Economic Research (TIER) decreased somewhat; however, the construction indicator moved up in September.
Taiwan's exports in September 2017 increased by 17.52% compared with the same month of 2016 that would be the fourth month of double digit growth in exports. Regarding imports, Taiwan's imports in September 2017 increased by 11.41% compared with imports in September 2016. Exports and imports grew by 14.28% and 14.71% y-o-y respectively from January 1st till the end of September this year, Taiwan's exports and imports gave a trade surplus of US$ 40.60 billion or an increase by 12.29% on a y-o-y basis during this period.
Taiwan's consumer price index (CPI) went up by only 0.50% in September 2017 compared with the same month of previous year. The current inflation rate has gradually moved back down compared with previous months. The core inflation rate stood at 0.82% in September, 2017. In addition, the wholesale price index (WPI) moved up by 1.62% in August 2017 on the year-on-year basis. On the cumulative basis, the CPI and WPI went up by 0.69% and 0.77% respectively compared with the same period of last year.
As for exchange rate, the NTD went somewhat weaker due to the relatively stronger USD, as the Fed had sent out certain hawkish messages. As a result, the recent more hawkish announcement such as a year-end rate hike and planned balance sheet unwind did strengthen the USD later. Anyway, the NTD/USD stood at 30.305 in late September 2017 indicating a 0.34% depreciation. Regarding the interest rate, it remained low and steady in September 2017 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 30.6% or decreased by 4.6 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 21.2% or increased by 0.2 percentage points than 21.0% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 48.1% or increased by 4.4 percentage points compared with 43.7% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was rather neutral.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 19.0% in the target month or decreased by 5.5 percentage points than 24.5% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 15.3% or decreased by 0.8 percentage points compared with 16.1% 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 65.7% or increased by 6.4 percentage points compared with 59.3% 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 September, 2017 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 102.22 points in August moved down to 101.72 points in September that would be the first dip after three-month consecutive increase. Figure 1 shows a decrease of 0.50 points.
The TIER service sector composite indicator for September 2017 adjusted for seasonal factors on moving average, also saw a downward correlation, and from a revision of as 95.61 points in August moved down to 93.55 points in September that would be the first dip after a previous one-month mount. Figure 1 shows a decrease of 2.06 points.
In addition, the TIER Construction Sector Composite Indicator for September 2017 adjusted for seasonal factors on moving average however saw an upward correction, and from a revision of 95.64 points in August went up to 95.81 points in September. Figure 1 shows an increase of 0.17 points, the first hike after a previous one-month dip.

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

 

 

 
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