Commerce Development Research Institute (CDRI) announced today on 8th that the "Index of Service Industry, ISI" for December 2016 was slowed by the strength of its export, the "tend to warm" light changed to "steady" green with an index score of 103. Overall, Taiwan's business services industry is still benefiting from the global economic upturn, as well as the domestic market in the New Year and Lunar holidays, under the stimulation of buying goods, only generating December index slightly down one point, ensuring the economic growth trend is stable. In the end of January 2016, owing to New Year holidays and red envelopes of Lunar New Year, the consumption demand for domestic hypermarkets, shopping centers, tourism and restaurants were boosted. Forecasting January business climate index of business services will once again push up to 105 points, showing a tendency warm red light. February traditionally is the lighter export season, even with the blessing of Lantern Festival activities and 228 consecutive holidays; the economy index scores are still fine-tuned to 103 points, and shows green light for the economy.
Changes in Indicators: Europe and the United States/ End of Christmas Holiday Buying/ Our Nation Export Strength Slowed
In December 2016, due to buying stops at the end of holiday in Europe and the United States, with adding other factors, our exports slowed down. In terms of human resources, the average domestic working hours per person per month and average overtime hours decreased. In terms of operating conditions, the tonnage of civil aviation airports decreased compared with back in November, while the turnover of professional and technical services decreased in December as the relevant manufacturers entered closed season. The wholesale and retail sales grew significantly with annual growth rates of 2.5% and 2.1% by the effect of Christmas and New Year consecutive holidays. The annual growth rate of the catering industry was the most impressive, at 6.4%. On the whole, the wholesale industry was not as good as November because of the slowdown in exports. However, in the case of continued domestic demand, the ISI in December fell slightly to 103 points, indicating a “steady” green light.
The Global Status: Stability of the US Economic Recovery/ Positive Eurozone Economy / Japan Back to Normal/ Strong Domestic Demand in China
US retail sales and catering services (excluding car sales) totaled USD 4,691 billion in December; an increase of 4.14%, indicating that the US private consumption continued to heat up. Quarterly non-farm payrolls increased by 2.93% per annum in the fourth quarter and the US Institute for Supply Management reported December's non-manufacturing PMI of 57.2, unchanged from November, indicating that US domestic demand is in expanding stage. The unemployment rate came in at 4.8% in December, and went up 0.1 percentage points from November, while non-farm payrolls fell by 295 million. But the unemployment rate is quite close to the long-term natural rate of unemployment in the United States and meaning that the employment situation is stable. Driven by demand, the United States consumer price index rose 2.1% in December, has reached the inflation target set by the Fed, the US economy has confirmed a stable recovery phase, the Fed raised interest rates on the 15th, one yielding the federal funds rate to 0.75%.
December annual growth rate of the Eurozone CPI rose to 1.12%, compared with November, a substantial increase of 0.52 percentage points for eight consecutive months of growth, while the comprehensive economic indicators continue to hit a new high this year, to 107.8: retail, consumer, service, construction and manufacturing confidence index all rose. Manufacturing purchasing managers index from 54.9 in October rose to 55.2, the service sector purchasing managers index remained level at 53.7. Overall, the Eurozone's economic fundamentals have been positively stabilized.
In December, Japan's annual retail sales growth rate from 1.69% in November fell to 0.57%, a total of JPY 13.4 trillion, still showing a growing trend. Imports fell by 2.58% in December, but the decline continued, while exports have turn negative to positive, with an annual growth rate to 5.39%. Civil core machinery orders increased 10.35%, industrial production index increased 2.76%, manufacturing purchasing managers index increased to 51.1, indicating the gradual normalization of Japan's economic momentum.
China's exports fell by 6.1% in December, while imports continued to grow at an annual rate of 3.1%, on the back of a higher base last year. Retail sales of consumer goods in December amounted to RMB 31,757 billion, an annual growth rate of 10.90%, a slight increase of 0.01% compared with 10.81% in November, indicating that private consumption is still going strong. December manufacturing purchasing managers index was 51.4, has been for five consecutive months in the prosperity line above the boom, the manufacturing sector is still in the expansion of the status.
Indicators Forecast: January Economic Dynamism/ February Economy Back in Green Light
In January 2017, benefited from the effect of the Lunar New Year holiday, the year-end dinner, seasonal re-furnishing, pre-ordering dinner of New Year’s Eve, New Year gifts; even travel and other consumer demands, pushing up the volume of trades for hypermarkets, department retail stores and catering industry. Therefore, the estimated ISI index will push up to 105 points, the signal once again turned back on behalf of the boom towards the strong yellow light.
At the beginning of February 2017, the Lunar New Year Festival, the Lantern Festival and 228 consecutive holidays are expected to boost the business performance of the commercial services sector as a consumption momentum and continuation to grow. However, due to domestic and export strength of the market mechanism, they may have an impact on the wholesale industry, with ISI indicator score of 103 points, and shows the light back in green.
Indicator Score:
ISI indicator sources are divided into three categories, namely, the securities market, human resources and operating conditions. In November 2016, the variables constitute the changes and the analysis is as follows:
1. Securities Market: both stock price index and transaction value of commercial service industry fell, and the index score was revised down to 98 points in December 2016.
2. Salaries: the average monthly working hours per employee in the commercial service sector declined in line with the average overtime per person per month. The December index was revised down to 100 points.
3. Operating Conditions: In terms of the forecast of the contribution of the index, although turnover of the professional and technical services sector declined significantly, the turnover of wholesale, retail and catering businesses have increased significantly. The two factors offset the December index score and was unchanged from the previous month, with a score of 99.
