Commerce Development Research Institute (CDRI) announced today on 5th that the "Index of Service Industry, ISI" in July 2017 represents the red yellow light and scores of 104 points. Main reason, the export momentum is to stimulate the performances of wholesale industry and raise the overall business services industry even under last year's higher revenue of domestic retail & catering industry and this July’s decreasing revenue. The overall performance of the services industry remained as the "tend to warm" red yellow light.
August exports continued to increase, the annual growth rate maintain a positive growth, mainly due to the global industry to release the annual new mobile phone to stimulate the demand for Taiwan’s semiconductor, and lift the needs of domestic related components, led the wholesale industry performance growth. The domestic market is the summer tourism season, sightseeing and cold beverages related seasonal demand in goods are strong, transforming the retail and catering industry turnover performance. In addition, August also coincides with Father's Day, Chinese Valentine's Day as well as the new school semester starting season, the synchronization in promote the catering industry and retail performance. It is noteworthy that despite the increasing number of visitors from Japan, Korea, Southeast Asia and for Taipei 2017 29th Summer Universiade have stimulated domestic demand for purchasing and retail catering, but the number of visitors from China to Taiwan has decreased by 30% over the same period last year, the ISI continues to score 104 points.
In September, we estimated our business services industry will be benefited from opening sales of the new iPhone. From year to year data shows that whenever there’s new iPhone opening sales, will enhance our export volume, so that the performance of the wholesale industry has a higher performance, but also simultaneously pulled up the domestic consumer electronics retail sales growth. In the domestic market, due to the large worship purchase activities in Chungyuan Festival, and department stores’ anniversary sales began in September. Overall, they will stimulate the retail growth in discount store and department store. In addition, due to the arrival of the Mid-Autumn Festival in October, the advanced stocking of gifts and festive goods also play an important part for wholesale industry. It is estimated that the ISI will be pushed up to 105 points in September.
Global Situation in July: World's Major Economies Growth and Stability
University of Michigan issued a consumer confidence index in July was 93.4, an increase of 3.78% over the same period last year; and OECD issued by the US consumer confidence index of 100.9, an increase of 0.28% over the same period last year. Sales for retail and catering services (excluding car sales) rose to $ 3,757.6 billion US Dollars in July, up 3.2% from a year earlier. Consumer confidence and retail sales continued to grow, showing continued expansion of private consumption. While the manufacturing and non-manufacturing purchasing managers index were 56.3 and 53.9, are still above the line. The number of non-farm payrolls in July was 12,425.7 million, an increase of 205.7 million over the same period last year. The unemployment rate fell by 0.5% from the same period last year to 4.6%. Which also shows that consumption expansion led to substantial output growth, coupled with the inflation rate of 1.7% in July, the Fed raising interest rates in the short term is unlikely, so the US economic outlook is quite optimistic.
In July, EU consumer confidence index for the eurozone was -1.7, up 6.2% from -7.9 in the same period last year. The consumer confidence index surveyed by the OECD was 101.0, up 0.6%, and consumer confidence in the eurozone continued to enhance. In the same period, the eurozone consumer price index was 108.7, the inflation rate of 1.3%, indicating that the eurozone's private consumption force is continuing to heat up. The OECD's business confidence index was 101.3, an increase of 1.0% from the same period last year, and in June, the OECD's business confidence index was 101.6, up 1.0% from the same period last year. The overall unemployment rate and youth unemployment rate were 9.1% and 18.7%, respectively, compared with the same period last year fell 1.0% and 2.3%, indicating that the eurozone continued to improve the economy, but also confirms the expansion of consumption. July's Economic Sentiment Indicator (ESI) came to a new high this year, with a score of 111.2. Overall, the European boom has seen signs of growth, and a positive outlook.
Japan's July export and import value were 576.3 billion and 546.3 billion US dollars, an increase of 6.0% and 5.7%. In the continuous improvement of trade activities, manufacturing performance continued to expand, the labor market continued to improve. In July, the manufacturing purchasing managers' index was 52.1, above the level of prosperity. The unemployment rate came to 2.8%, down 0.23% from the same period last year. The number of employment increased by 840,000 people over the same period last year. As a result of the improvement in the manufacturing and labor markets, the domestic demand market expanded, with the service purchasing managers' index of 52.0 in July, the consumer confidence index of 43.8, up 2.5% from the same period last year and the total retail sales to 12.2 trillion Yen, an increase of 1.88% over the same period last year. However, the consumer price index is still hovering around 100, the July inflation is only up 0.5%, indicating that although Japan’s economy continues to recover, but the recovery is not strong.
China's annual import and export growth rate in July were 7.2% and 11.0%, the growth rate compared to June has shown signs of slowing down. Looking into the manufacturing performance in July, the manufacturing index was 53.5, an increase of 1.4%; manufacturing purchasing managers index was 51.4, an increase of 1.5%, compared to the data in June are slipping. In the domestic market, China's total retail sales of consumer goods in July was 29,609.80 billion RMB, up 10.37% over the same period last year; the official non-manufacturing purchasing managers index was 54.5 compared to June, and the growth rate also slowed down.
Domestic Situation in July: Trend is Warm with Red Yellow Light
Global economy continued to improve, our export value in July was 271.1 billion US dollars, up 12.5% over the same period last year, in addition to driving the growth performance of manufacturing industry, pushing up the wholesale industry turnover and increased labor market demand. In July, the manufacturing index was 113.4, an increase of 2.9% over the same period last year; the manufacturing purchasing managers' index was 59.0; the turnover of the wholesale industry reached 8,384 billion New Taiwan dollars, an increase of 4.2%; the number of non-agricultural employment was 10,804 people, an increase of 88,000 people over the same period last year; the unemployment rate was 3.84%, down 0.18%. Production and employment market have improved, which help the expansion of the domestic market, non-manufacturing purchasing managers index from 53.0 in June to 54.8% in July, and to speed up the expansion rate. Last year, department stores and shopping centers launched promotional activities in July and Chungyuan Festival purchasing season in June, traded in July 2017 with annual reduction of 1.7%, turnover to 3,388 billion New Taiwan dollars. Catering industry is benefiting from the industry store expansions, and cold beverage demand in warm weather, led turnover reached 384 billion New Taiwan dollars, an increase of 1.8%. Overall, the performance of the service industry is not bad, July ISI scores of 104 points with red yellow light.
Indicator Score:
ISI indicators are divided into three major sources, respectively, for the securities market, salaries and operating conditions. In July 2017:
l Securities Market: Business services industry-related stock index fell but the turnover value grew with 101 points.
l Salaries: Due to the average working hours and overtime hours, July 2017 index score of 105 points.
l Operating Conditions: In addition to wholesale, retail and catering turnover and freight tonnage index declined, the remaining indicators are up, the July ISI score is up to 103 points.
August and September ISI Forecast:
The third quarter for the export of our traditional season, with the new iPhone 8 will held a new product launch in September, related components continue to pull goods, led optical lens, semiconductor, panel, steel and plastic raw materials and other needs increased, and then lifted our wholesale industry performance. In terms of domestic demand, in August coincides with the summer tourism and summer business opportunities season, to promote our tourism-related retail and catering performance. In addition, it is the result of the promotion of food and beverage, wholesale and retail trade, such as Father's Day, Chinese Valentine's Day and the school semester starting season, under the purchasing demand from within the families or couples, stationery, home appliances, 3C products, health supplies and gold accessories. It is noteworthy that the number of passengers from China to Taiwan compared to same period last year reduced by 30 percent, but from Japan, South Korea and Southeast Asia are up about 30 percent in growth of tourists, including Japanese tourists grew about 40% in one single month supplemented our tourism, catering and retail sales, so that the August ISI will continue the boom from July, maintained at a "tend to warm" ISI scores of 104 points.
In September, its estimated to drive our exports and the performance of the wholesale industry to grow for the new iPhone sales period, but also simultaneously elevated the domestic 3C retail sales growth. In addition, from September to November the anniversary sales of department stores, retailers will be in response to all kinds of low-priced goods, promotional activities and free home delivery, driving people to buy, enhance the retail and logistics Industry revenue. The department anniversary stores’ sales will also be launched in September to November, according to the various department stores anniversary sales of different time, the relay launched promotional activities such as promotions, by means of marketing to improve buying, to promote the performance of retail department stores. In addition, the upcoming Mid-Autumn Festival and the National Double Tenth Day in October, under the expectation mentality, will increase the demand on relevant festive gifts, gift boxes and catering needs, the relevant industries will also be prepared in advanced and in stock. However, the Federal Reserve System (FED) has announced whether it will reduce its balance sheet; whether it will affect our overall business services, it is worth to follow-up & stay on observation. Therefore, the estimated ISI scores of 105 points, and the light is "tend to warm" red yellow light.
