Commerce Development Research Institute (CDRI) today on 8th announced that in June 2017, the "Index of Service Industry, ISI" in yellow red light of 105 points. The main reason is that the overseas boom last month, in the export momentum to stimulate the wholesale industry to push up the overall performance of the service industry, even due to last year's domestic retail and catering industry, so that the performance of June profit fell slightly, the overall business services performance is still consistent with previous month.
July into the export season, thanks to the relevant components of the iPhone 8 spare parts and automotive electronic components, continued to drive the performance of the wholesale industry growth. The domestic market due to the summer tourism season and the arrival of the summer business opportunities, driven tourism and cold drinks related seasonal demand, lift the retail and catering industry turnover performance. However, the number of visitors from China decreased by nearly 30% over the same period last year. The business service sector index was adjusted to 104 points in July.
Supermarket sales in August for Chungyuan Festival, early to stimulate shopping spending, coupled with the Father's Day related goods and family gatherings and business opportunities, is expected to lead the food, computer and 3C product retail performance. It is noteworthy that the US Federal Reserve (Fed) in July proposed the country's second half of the policy report that the US economy, although steady growth, but still face weak investment and productivity problems, may indirectly or directly affect our exports, which makes the overall performance of the wholesale industry as expected. Estimated August business services index score of 103 points, the lights for the "stable" green light.
Global Situation in June: World's Major Economies Growth and Stability
The University of Michigan's consumer confidence index was 95.1 in June, up 1.71% from a year earlier, while the OECD's consumer confidence index was 101.1, up 0.38% from a year earlier and consumer confidence continued to grow compared with the performance same year in March, the annual growth rate has signs to gradually reduced. Sales of retail sales and catering services (excluding car sales) rose $ 3,794.1 billion in June, up 3.2% from a year ago, indicating that US private consumption was still positive. In terms of production, manufacturing and non-manufacturing purchasing managers' indicators were 57.8 and 57.4, respectively, showing production surface expansion. In the labor market, the number of non-farm payrolls (private sector) was 12,405.1 million in June, an increase of 210.0 million from the same period last year. The unemployment rate fell by 0.6% from the same period last year to 4.5%. In the employment expansion makes the overall income of the country to improve, promote the growth of private consumption, making retail sales continued to rise, the US outlook is still optimistic about the economy. However, the IMF's economic outlook report released in July, the 2017 economic growth forecast by 0.2 percentage points to 2.1%. The main reason for including the expansion of fiscal growth is lower than expected, and the Federal Reserve announced a reduction in the balance sheet plan, coupled with the consumer confidence index continued to decline in the growth rate of future economic trends worthy of attention.
The European Union announced in June the eurozone consumer confidence index revised to -1.3 level, compared to 6.0% growth over the same period last year, indicating that the eurozone of private consumption continued to heat up. In terms of production, the manufacturing sector purchasing managers' index of the eurozone were 56.8 and 53.2 respectively, with the OECD's business confidence index of 101.2, an increase of 0.9% over the same period last year, indicating that the industry continued to be optimistic the future of the eurozone economy. In the labor market, the overall unemployment rate and youth unemployment rate in the eurozone in April were 9.0% and 18.3%, respectively, down 1.0% and 2.8% respectively over the same period last year. This shows that the growth of the eurozone industry should also prove that the eurozone consumption expansion. Overall, the eurozone's economic recovery is slow, but the final demand continues to grow, coupled with the US trade protection policy turn, the European political risk temporarily eased, is expected to gradually enhance the eurozone recovery efforts.
Japan's export value and import value in June were JPN 57.0 trillion and 56.2 trillion, an increase of 4.4% and 9.8% respectively, and trade activities continued to improve. The industrial production index (seasonally adjusted) was 101.7, up 5.0% from the same period last year, driven by continued active trade in commodities. Manufacturing purchasing managers index of 52.4, the manufacturing sector showed expansion trend. The unemployment rate (seasonally adjusted) was 2.8% in June, down 0.3% from the same period last year, and the number of jobs was 6,531 million, a net increase of 750,000 over the same period last year. In June, the service purchasing managers' index for the service sector was 53.3, which was above the level. But the inflation rate remained low, the consumer price index in June was 100.2, up 0.3% from the same period last year, indicating that Japan's economic growth is still slow.
China's manufacturing production index was 54.4 in June, an increase of 1.9%, the official published manufacturing purchasing managers index of 51.4, showing the manufacturing boom located in the expansion phase. China's total retail sales of consumer goods were RMB 29,807.6 billion, up 10.98% over the same period last year, while the official published non-manufacturing purchasing managers index of 54.5, showing consumers and manufacturers for the future positive outlook.
Second half of the Global Outlook: Moderate and Stable Globally but Slowed Down in United States
The first half of 2017 in the global trade and manufacturing industry, the moderate expansion, led the global economic growth, IMF in July for the year 2017 global economic growth rate forecast of 3.5%. However, the US economic austerity policy, the British off the European negotiations, and the China economic rebalancing and other issues, for the global economy added uncertainty.
In the advanced countries, the United States owing to the job market improved, private consumption is supported, but because of fiscal policy changes and uncertainties, the market for fiscal stimulus is expected to decline, the policy expansion effect weakened, coupled with monetary policy tends to tighten trend, the second half of the economic growth strength has the risk of slowing down, the IMF 2017 economic growth forecast from 2.3% to 2.1%. The eurozone major countries such as France, Germany, Italy and Spain's economic performance are better than expected, rising domestic demand in this case, coupled with political risk mitigation, the second half of the economic growth strength is expected to enhance the IMF on the eurozone of the economic growth forecast in 2017 from 1.7% to 1.9%. Japan in the global economic recovery, driven by the gradual growth of foreign exports, coupled with the Japanese companies continue to expand investment, driven by the overall economic recovery, private consumption has grown, the IMF's economic growth forecast for Japan in 2017 from 1.2% to 1.3% in the emerging countries, because the global economy improved, foreign exports improved, and thus promote the economic growth of countries. China due to the supply of reform policies to implement effectively, overcapacity phenomenon gradually eliminated, coupled with the expansion of fiscal policy to promote the expected growth rate in the second half will increase, the IMF on China's economic growth forecast in 2017 by 6.6%, raised to 6.7%.
Crude oil prices by the US shale oil supply increased significantly, the stability of oil prices is conducive to maintaining the momentum of global economic growth. Bulk material prices in the first half of the performance is stable in 2017, making the country's inflation rate remained stable and low standards. In the supply side continued to stabilize the demand side of the gradual warming of the conditions, second half of 2017 of the economy will continue in moderate growth.
Domestic Situation in June: Trend of Hot Yellow Red Light
The global economy continued to improve, Taiwan's export value in June was 258.3 billion US dollars, up 13.0% over the same period last year. Exports continued to grow, driving the performance of Taiwan's manufacturing industry, manufacturing production index was 113.0 over the same period last year increased by 3.6%, manufacturing purchasing managers index was 57.6, indicating that the manufacturing boom is still in the expansion. The wholesale sector was affected by export growth, with turnover reaching $ 8,518.6 billion, an increase of 5.7%. In the labor market, the number of non-farm workers in June was 1,078.3 million, an increase of 8.9 million over the same period last year. However, the unemployment rate was 3.7%, which was only 0.2% lower than that of the same period last year. The turnover of the retail sector in June was $ 3,298.6 billion, down 1.8% from the same period last year, while the turnover of the catering industry was $ 364.7 billion, up only 0.3% from the same period last year. However, the non-manufacturing purchasing managers index fell from 56.3 in April to 53.0 in June, the index has been declining for two consecutive months, the business services industry trends should continue to track and observe. Overall, the commercial service industry performance is not bad, June ISI indicator score remained at 105 points, the traffic signal for the boom "tend to warm" yellow red light.
Domestic Outlook: Second Half of the Overall Trend of Business Services is Positive but not Strong
In the second half of 2017, the global boom is expected to improve, as well as artificial intelligence, Internet of Things, electric vehicles and other emerging technology applications, driven by our electronics industry will drive the second half of the export performance. The US Federal Reserve will raise interest rates and reduce the balance sheet of the attitude is clear, but also lowered the New Zealand dollar against the US dollar exchange rate uncertainty, is conducive to stabilize our second half of the export performance. Driven by the growth of exports, the second half of the business services industry is expected to have a very good performance. First, our current inflationary pressures and inflation expectations are in a moderate state, in the case of increased labor income, will be conducive to the growth of private consumption. In addition, the domestic forward-looking infrastructure if the smooth implementation of the industry-led by the effect, will gradually emerge in the second half. In the private investment and private consumption gradually improved, is expected to push up the second half of our retail and catering industry performance.
But the iPhone 8 global sales, the US Treasury Department’s exchange rate report, and the strength of the euro and other international factors, will affect the trend of New Taiwan dollars, affecting the second half of the export performance. The current market is expected to iPhone 8 revision of the smaller than expected, but not in the impact on the export performance of components, but the market for the iPhone 8 delayed in September there are doubts about the sale, our exports will add uncertainty. The US Treasury Department will re-publish the exchange rate report in October 2017, whether it will change the assessment criteria, Taiwan will move out of the watch list, will have an impact on the trend of the New Taiwan dollar. In addition, the central banks, including Europe, the United Kingdom and Canada, may adopt a tight monetary policy that will affect the flow of international funds and will also affect our export performance, thus affecting the performance of our business services.
In addition, a case of one-off and annuity reform and other policy factors, affecting the willingness of small and medium sized enterprises and consumer spending, reduce consumer confidence. One in particular, pension reform policy, which may impact the constant income of consumers, the negative impact of civil fees on the constant basis, may affect the growth of business services in the second half of the year.
Indicator Score:
ISI indicators are divided into three major sources, respectively, for the securities market, salaries and operating conditions. In June 2017:
l Securities market: Business services industry-related stock index fell but the turnover value growth, June and May index scores were flat, with 101 points.
l Salaries: All items are up or flat, June index score up to 106 points.
l Operating Conditions: Business services industry turnover increased but the cargo tonnage related indicators are down, June and May index scores were flat with 101 points.
July and August ISI Forecast:
The third quarter of our export performance season, coupled with the iPhone 8 related components continue to pull goods, led optical lens, semiconductor, panel, steel with plastic raw materials and other industries performance growing. In addition, Tesla began delivery by the end of July and is expected to have a level of 20,000 units by the end of the year. It will also drive the production capacity of the automotive-related supply chain and drive the growth of the wholesale industry in July in the domestic demand, in July for the summer tourism and summer business opportunities season, to promote our retail and catering sales performance is relatively a better performance, but to Taiwan guests cannot have further breakthroughs, affecting the performance in tourism, and thus affect the performance relevant catering and retail trade will fine-tune the commercial service sector indicator to 104 points in July, and the lights will maintain the "tend to warm" yellow red light.
Father's Day in August, boosts in retail goods, family dinner and other related performance in growth. In addition, the upcoming Chungyuan Festival, various discount stores and convenience stores gradually ignited, is expected to promote the performance of the retail industry in growth. In addition, in early September for the school, including mobile phones, tablet, computer, peripheral consumer electronics and other related needs of goods distribution, is expected to stimulate the growth of the domestic market. In global economy, the Federal Reserve’s July report on monetary policy pointed out that the US economy grew steadily in the second half of this year, but there were many problems, including weak investment and slow growth of productive forces, which could affect our wholesale industry directly or indirectly, and then lower the overall performance of our business services. Estimated business service industry indicator score of 103 points, the light is "stable" green light.
