Commerce Development Research Institute (CDRI) announced on 6th today that the "Index of Service Industry, ISI" in March 2017 indicates the red and yellow “tend to warm” light and score of 104 points. The main reason is that the international economic recovery continues to drive Taiwan's export-related industries, but pulling the overall performance of the wholesale industry, with the annual growth rate of dazzling 6.05%. Taiwan’s exports in the first quarter, increased domestic employment opportunities and income levels, pushing up the domestic consumption force, to promote the retail and catering industry sales performance.
In April, due to the continued orders in heat of European and American global market, especially it’s an important year for Apple, under the fermentation of Taiwan's exports, to promote the exports continued smoothly, and maintain the domestic wholesale business operations. Retail and catering industry, due to Tomb Sweeping holiday, driving the retail and catering industry sales performance, estimated that the commercial service industry index score slightly raised to 105 points, the light is still "tend to warm" yellow red light.
In May, domestic observation focuses on the holiday effect of the Labor Day and the consumption of Mother's Day. Holiday tourists from China and other Asian countries; Mother's Day generates family outing and gathering dinner - both benefit directly to retail and catering industries. It is noteworthy that the appreciation of the Taiwan dollar against US dollar may affect our willingness to take export orders, thus affect the profitability of the wholesale industry. The overall business services climate index is estimated to be down 1 point from April, to 104 points, the signal light is still "tend to warm" yellow red light.
Global Status: Main National Market is Showing a Steady Recovery
US consumer confidence continued to grow in March, the University of Michigan issued consumer confidence index rose from 95.7 in February to 96.9, an increase of 5.9% over the same period last year; OECD issued by the US consumer confidence index of 101.3, same as February, an increase of 0.8% over the same period last year. Sales of retail and catering services (excluding car sales) rose to USD 4,708.4 billion in March, up 5.1% from a year ago, indicating that the US private consumption was quite hot. In the production, manufacturing and non-manufacturing purchasing managers index were 57.2 and 55.2, are in the expansion phase, the OECD issued by the US business confidence index of 101.0, compared with 1.46% growth last year, showing the enterprise for the commodity market outlook optimism. In the labor market, the number of non-farm payrolls (private sector) was 12,354.0 million in March, an increase of 89K people from the previous month, an increase of 203.3 million people over the same period last year. The unemployment rate fell by 0.5% from the same period last year to 4.5%. In the employment expansion, the increase in consumer income, confirms the consumer and business prospects for the future optimistic view. US inflation continued to heat up, pushing inflation, the Fed has raising a yard after March 16th, the inflation rate from 2.8% in February fell to 2.4% in March, inflation has tended to stable.
European Union announced the eurozone consumer confidence index to -5.0, compared to 4.7% growth over the same period last year, showing the eurozone in March of private consumption continued to heat up. Germany and France in March, the actual retail sales deflator index (seasonally adjusted) were 110.1 and 120.4, respectively, annual growth rate of 3.97% and 3.53%, driven by the two economies, the eurozone is expected to grow. In terms of production, the manufacturing and service sector purchasing managers' indices of the eurozone were 56.2 and 56.0 respectively, with the OECD's business confidence index of 100.9, representing an increase of 0.66% over the same period last year, indicating that the industry is still looking good. In the labor market, the overall unemployment rate and youth unemployment rate in the eurozone in March were 9.5% and 19.4% respectively, all unchanged from February, but fell 0.7% and 1.9% respectively from the same period last year, indicating that the eurozone's industrial consumption is still in expansion. Consumer spending rose to 109.0 in March, driven by consumer expansion and industrial growth, up 1.58% from a year earlier, compared to a 1.98% slightly lower target of 2.0% in February. Overall, the final demand of the eurozone is still growing, but the pace of growth may have slowed down, to be sustained attention.
Japan's export and import value in March were JPN 72.3 trillion and 66.2 trillion, an increase of 11.97% and 15.82%, trade activities continued to improve. The industrial production index (seasonally adjusted) was 99.6, which was 3% higher than the same period last year and the manufacturing purchasing managers' index was 52.4. Although the manufacturing sector continued to expand, the expansion rate slowed down. Observing the performance of the labor market, the unemployment rate (seasonally adjusted) was 2.8% in March, unchanged from February, down 0.4% from the same period last year, and the number of employees was 6,496 million, a net increase of 109 million over the same period last year. The consumer confidence index for March was 43.9, up 2.6 percent from the same period last year and JPN 41.3 trillion in commercial business, up from 2.66 percent over the same period last year, while the service purchasing managers' index was 52.9. But the inflation rate remained low, the March consumer price index was 99.9, compared with the same period last year grew only 0.2%, indicating that the Japanese economy has return to normalization, there is still a distant gap to fill.
China's trade performance in March, the import and export into double-digit growth, the annual growth rate was 20.3%, 16.4%, but also to restore trade surplus. In the export led by the March manufacturing production index of 53.8, an increase of 1.6%, the official announcement of the manufacturing purchasing managers index of 51.2, showing the manufacturing boom is in the expansion phase, help to promote labor income, guide the people consumption growth. China's total retail sales of social consumer goods in March was RMB 27,863.7 billion, up 10.6% over the same period last year, while the official published non-manufacturing purchasing managers index was 53.1, with consumer confidence index came 111.0, an increase of 11%, showing consumption and manufacturers for the future optimistic outlook. Overall, the steady expansion of domestic demand, a substantial improvement in exports, will be able to push up economic growth.
Domestic Situation: Follow Global Major Markets Simultaneously in Export Consumption Growth
Global economy continued to improve, Taiwan's export value in March reach USD 257.1 billion, up 13.18% over the same period last year. Under the leadership of the export, our industrial production index exceeded 100 to 112.87, an increase of 3.22%, over the same period last year, manufacturing purchasing managers index of 61, showing that the manufacturing boom is rapidly expanding. The wholesale industry was affected by the improvement in exports, turnover reached NTD 8,333.2 billion, an increase of 6.05%. The improvement of the production sector has led to the expansion of labor demand and the improvement of employment domestically. Non-farm sector employment in March was 1,075.6 million, a net increase of 7.6 million over the same period last year, the unemployment rate was 3.75%, down 0.1% over the same period last year. The improvement in the labor market helped boost domestic income and the performance of the commercial services sector. The retail sales in March were NTD 3,251.95 billion, an increase of 1.7% over the same period last year, while the turnover of the catering industry was NTD 351.043 billion, an increase of 3.9% over the same period last year. In addition, the non-manufacturing purchasing managers' index was 55.1, returning to the boom. Overall, although in March, it’s our export and domestic tourism’s traditional off-season, but in Taiwan's export growth and consumption driven by private consumption, business service has growth, in ISI index scores to 104 points, the lights re-standing back on "tend to warm" red yellow light.
Indicator Score:
ISI indicators are divided into three major sources, respectively, for the securities market, human salaries and operating conditions. In March 2017, the analysis as follows:
● Securities Market: The share price index and transaction value of the business services sector are affected by the rate of the US Federal Reserve System, resulting in a greater volatility in the stock price. In March 2017, the index score was slightly revised to 100 points.
● Salaries: The rest of the business services sector increases except for the average monthly working hours per person per month and the monthly average monthly pay per person. In March 2017, the index score was 104 points.
● Operating Conditions: Only the rental industry and professional & technical services industry turnover decreased, the remaining projects are up. In March 2017, the index score was 100 points.
April and May ISI Forecast:
In April, the United States is expected to continue the expansion of the state in March, the association to raise interest rates to curb inflation as a long-term effective strategy, but also said that the heat continued to boom in April. In Europe, due to the continued expansion of production and consumption side, the inflation has been close to 2.0% of the target value is expected in April is still showing a moderate growth stage. On the other hand, Japan and the China to benefit from the continued international trade, is expected in continuation to expand the country's economy. Comprehensive foreign markets continue to heat, will promote Taiwan's export performance, the overall wholesale industry benefit. After April, China will also affect by the effect of iPhone 8 pull out, will make exports continue to flourish. In the retail and catering industries, due to April holiday effect, with a slight increase in the overall business services sector. The indicator scores are fine-tuned up to 105 points and the lights remain as "tend to warm" yellow red light.
In May, due to the coming of Mother's Day, estimated to bring a wave of family dinner and travel activities, pouring department store retail and catering industry revenue. In the same month, result in May Labor Day holiday effect, China and other Asian tourists coming to Taiwan increased, estimated to benefit our department store retail and catering industry. South Korea was threatened by North Korea, causing losing orders effect, is expected to push up the wholesale industry revenue. But mentioning by the US President Trump that we manipulated the exchange rate which offset by the growth of the wholesale industry. The overall business services sector index is estimated to be down 1 point from April, to 104 points, and the lights represents “tend to warm” yellow red light.
