The Index is expected to rise to 105 on December with yellow red light

The estimated number on January 2018 is 106, also stays in yellow red light.

From 2015 to 2017, (Q1-Q3) the GDP of Service Industry growth rate were 1.24%, 1.34% and 1.72%, shows that the economic recovery started from 2016, keeps in an unbiased condition in 2017. Which match the CDRI ISI index prediction, a strong rising will hardly be seen in the beginning of 2018, but hopefully will not go down.

CDRI releases the Service Industry Index for November 2017 today (10^th ) which indicates a “tend to warm” yellow red light, scores 104. It is expected that the index will also be yellow red light, with the score of 105. As for the international commercial activities and economy, the Consumer Confidence, retail selling and vehicle selling are going up in the US, the employment market is stable, inflation rate comes to 2.23%, which shows the domestic demand is high in the US. Although the retail sales in the euro zone did not perform as expected in October, consumer confidence continued to strengthen in November, youth employment rates continued to improve, and the economic climate remained optimistic. Japan’s growth in merchandise exports and imports in November both helped the industrial production index continue to rise and the economy maintained a steady recovery. Domestic demand in China continues to heat up. In November, total retail sales of consumer goods increased 10.2%. Therefore, thanks to the increase in demand in the international market, our exports in November increased by 14%, driving the growth of wholesale industry revenue, and the turnover reached NT$873.6 billion, an increase of 3.5% by year. At the same time, domestic economic performance has also been driven by the international economy. The number of employed people, regular wages, and average working hours in October increased compared to the same period of last year. Coupled with the fact that the inflation rate remained at a low level, the actual salary of the people has increased, driving domestic consumer kinetic energy. Due to the recent positive transformation and expansion of domestic shopping malls, mass merchandisers, and supermarkets, such as extending the business hours during shopping festivals and intensifying the customers' consuming experience, the overall consumer growth in Taiwan has been achieved, and retail sales in November have reached $369.8 billion NTD, an increase of 3.4% by year, with a turnover of $35.3 billion in the catering industry, an increase of 2.4% by year.

The combination of domestic and international commercial and economic performances has enabled our overall performance of business services in November 2017 to remain the "tend to warm" yellow red light.

It is worth noting that the purchasing managers' index (PMI) value of manufacturing and non-manufacturing industries remained at a high degree of expansion in January, but the non-manufacturing stock index, employment index and business activity index all showed signs of slowing down. In the short term, the U.S. economy may show some signs of a slight decline. The PMI for the manufacturing and non-manufacturing sectors in the euro zone in November also maintained a high level of expansion, but inflation has been maintained at around 1.5% for seven consecutive months, and consumer demand expansion may have slowed. In November, Japan's manufacturing and non-manufacturing PMIs were still in an expansion phase, but they have been falling for two consecutive months. The current index is quite close to the line. overall, although the recent global economy has shown signs of a slight decline, the observation of our imports of raw materials and components shows that domestic companies are still optimistic about the performance of December 2017 and January 2018, the wholesale industry’s turnover will be expected to continue to grow. In anticipation of the growth of exports, the production and business activities of domestic industries will be stimulated, which will be conducive to the creation of job opportunities and the increase in wages.

The performance of business services in December 2017 and January this year is estimated. In December, thanks to the stimulating Christmas holidays and the strategy of extending business hours during department stores and during the anniversary, the demand for gifts and catering increased rapidly, and the sudden drop in winter temperatures prompted better sales of related products such as warm clothing items. The year-end count down activities and the continued low temperature will also help the domestic growth of sales in January this year.

On the catering industry, the Christmas holiday effect in December will continue to extend until the end of January for companies’ year-end party, leading to the growth of restaurant performance. In addition, this winter is colder than last year and related winter cuisine such as ginger duck, hot pot and lamb oven are expected to have a burst selling. Based on the above analysis, CDRI predicts that the scores of the business services industry in December 2017 and January 2018 will be 105 points and 106 points, respectively. The lights are also the yellow red lights that represent “tend to warm”.

Regarding the Service Industry Index for the year of 2017, except for the green light in February, each month in the whole year are yellow red light which means “tend to warm”, but the scores were moving back and forth from 104 and 105.

Although the year showing 2017 years is better than the same period of last year, the increase in each month is like that in the same period of last year, and couldn’t reach a higher growth, which represents a bottleneck for the economic activities of the business services industry. In January this year, the forecast for the score of the commercial service industry was 106, which finally exceeded 105. However, does that mean there will be a boom in the beginning of the 2018? We’ll see in the follow-up observations.

Indicator Score:

ISI indicator source is divided into three major directions, the securities market, salaries and operating. Following analysis as follows:

• Securities Market: The transaction value of the underlying shares of the commercial service industry slipped to 36.88 billion USD from 61.86 billion USD in October, the indicator score declined to 99.

• Salaries: The number of employment increased from 483.6 to 484.7 thousand in October, the indicator scores increased to 107 points. 

• Operating: The tonnage of road freight, air cargo, and number of aircraft taking off and landing all increased significantly in October, the index score rose to 104 points.