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2017.9.25
Plethora of indicators support the global recovery
TIER's manufacturing and service composite indicators rally in unison

The Taiwanese Economy in August 2017

Plethora of economic indicators have showed an optimistic outlook for the world economy. In spite of the continuously mounting leading indicators as well as purchasing managers' indices, world major forecasting agencies adjusted the growth ratios of the world and major economies. Improving global conditions help fuel Taiwan's industrial production and exports. Accordingly, the manufacturing and service composite indicators issued by the Taiwan Institute of Economic Research (TIER) increased at the same time signaling a rather expectant stance.
Taiwan's exports in August 2017 increased by 12.75% compared with the same month of 2016 that would be the third month of double digit growth in exports. Regarding imports, Taiwan's imports in August 2017 increased by 6.88% compared with imports in August 2016. Exports and imports grew by 12.54% and 13.79% y-o-y respectively from January 1st till the end of August this year, Taiwan's exports and imports gave a trade surplus of US$ 33.91 billion or an increase by 6.71% on a y-o-y basis during this period.
Taiwan's consumer price index (CPI) went up by 0.96% in August 2017 compared with the same month of previous year. The current inflation rate has gradually moved back up compared with previous months. The core inflation rate stood at exactly the same ratio also as 0.96% in August, 2017. In addition, the wholesale price index (WPI) moved up by 1.03% in August 2017 on the year-on-year basis. On the cumulative basis, the CPI and WPI went up by 0.72% and 0.64% 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 certain dovish messages. However, the recent more hawkish announcement such as a year-end rate hike and planned balance sheet unwind could strengthen the USD later. Anyway, the NTD/USD stood at 30.203 in late August 2017 indicating a 0.08% appreciation. Regarding the interest rate, it remained low and steady in August 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 37.6% or increased by 10.3% 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 20.8% or decreased by 10.3 percentage points than 31.1% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 41.7% or increased by 0.2 percentage points compared with 41.5% 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 25.4% in the target month or decreased by 5.3 percentage points than 30.7% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 14.3% or increased by 2.6 percentage points compared with 11.7% 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 60.3% or increased by 2.7 percentage points compared with 57.6% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was neutral.
The manufacturing composite indicator for August, 2017 adjusted for seasonal factors on moving average, saw an upward correction, and from a revision of as 100.61 points in July moved up to 102.65 points in August that would be the third month consecutive increase. Figure 1 shows an increase of 2.04 points.
The TIER service sector composite indicator for August 2017 adjusted for seasonal factors on moving average, also saw an upward correlation, and from a revision of as 94.41 points in July moved up to 95.87 points in August that would be the first increase after a previous decline. Figure 1 shows an increase of 1.46 points.
In addition, the TIER Construction Sector Composite Indicator for August 2017 adjusted for seasonal factors on moving average however saw a downward correction, and from a revision of 96.10 points in July went down to 95.44 points in August. Figure 1 shows a decrease of 0.66 points, the first drop after two-month consecutive mount.

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

 

 

 
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