Business Services Indicators

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In April 2017, Index of Service Industry in Red Yellow Light

Commerce Development Research Institute (CDRI) announced today on 5th that the "Index of Service Industry, ISI" represents red yellow light and scores of 104 points in April of 2017. The main reason is the global economy stimulating our production and labor market, and then pushes up the domestic consumption.

In May, due to the new smart phone will be launched in the second half, driven by our exports of related equipment and components, lift the performance of the relevant wholesale exporters to grow. As the global boom continued to heat up, coupled with consecutive holiday effect in May, is expected to pour out the retail and catering industry performance. However, the pressure of the appreciation of the New Taiwanese Dollars still exist, will affect our export performance, associated with the strength of domestic consumption, it is estimated that in May the commercial service industry index score maintained at 104 points, in "tend to warm" red yellow light.

In June, the iPhone8 industry chain early stocking, impact of pulling the goods, and department stores in the anniversary sale of the revenue performance are the main focuses. However, the May non-manufacturing purchasing managers' component index showed a high trend on inventories and a decrease in new orders and unfinished order indices, and continued appreciation of the New Taiwanese Dollars, which is expected to impact the June business services indicator, down to 103 points, the lights back to the "stable" green light.

Global Situation: US Economy is Optimistic/ EU continued Warming/ Japan Economy is Steady/ China Economy Slow Down

US consumer confidence continued to grow in April, the University of Michigan issued consumer confidence index rose from 96.9 in March to 97.0, an increase of 8% over the same period last year; OECD issued by the US consumer confidence index of 101.3, and same in March, an increase of 0.7% over the same period last year. Sales from retail sales and catering services (excluding car sales) rose to $ 3,695.4 billion in April, up 4.1% from a year ago, indicating that the US private consumption was quite active. In the production sector, manufacturing and non-manufacturing purchasing managers index were 54.8 and 57.5, in the expansion phase, OECD released the US business confidence index of 100.5, compared with the same period last year growth of 0.90%, showing the enterprise for the commodity market outlook persistent optimism. In the labor market, the number of non-farm payrolls (private sector) was 12,372.3 million in April, an increase of 19.4 million from the previous month, an increase of 205.8 million over the same period last year. The unemployment rate fell by 0.6% from 4.1% in the same period last year. In the employment expansion, consumption gains, with 2.2% in April inflation rate, confirms the consumer and business prospects for the future optimistic view.

The European Union announced in April that the euro zone consumer confidence index revised to -3.6, compared to the same period last year grew 5.7%, indicating that the euro domestic consumption continued to heat up. Germany and France, the real 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 EU is expected to grow continuously. In terms of production, the manufacturing and service sector purchasing managers' indices of the Eurozone were 56.7 and 56.4, respectively, and the OECD's business confidence index was 101.0, an increase of 0.77% over the same period last year, indicating that the industry still looking good in the economy. In the labor market, the overall unemployment rate and youth unemployment rate in the eurozone in April were 9.3% and 19.2% respectively, down 0.9% and 2.4% respectively over the same period last year. This shows that the growth of the eurozone industry should also prove that the eurozone consumption expansion. Consumer spending rose to 109.4 in April, driven by consumer expansion and industrial growth, up 1.89% from a year earlier, approaching a target of 2.0%. Overall, the final demand for the eurozone continued to grow, no longer concerns deflation, overall the recovery of the economy.

Japan's customs export value and customs import value in April were JPN 57.5 trillion and 53.1 trillion, an increase of 7.1% and 15.0%, trade activities continued to improve. The industrial production index (seasonally adjusted) was 103.8, and returned to more than 100, up 6.8% from the same period last year, driven by continued active trade in commodities. Manufacturing purchasing managers index of 52.7, the manufacturing sector showed expansion trend. In April, the unemployment rate (seasonally adjusted) was 2.8%, unchanged from March, down 0.4% from the same period last year, and the number of employees was 65 million, a net increase of 1.04 million over the same period last year. April consumer confidence index was 43.2, compared to 3.0% growth in the same period last year, the total commercial turnover of JPN 37.0 trillion, compared with the same period last year grew 1.54%, while the service purchasing managers index was 52.2. But the inflation rate remained low, April consumer price index was 100.3, compared with the same period last year grew only 0.4%, indicating that the Japanese economy return to normalization but it will take some time.

China's import and export growth rate in April were 8.0% and 11.9%, still maintain the trade surplus performance. Driven by export growth, the manufacturing index for manufacturing in April was 53.4, up 1.1%, and the official manufacturing purchasing managers' index was 51.2, indicating that the manufacturing boom was in the expansion phase. China's total retail sales of consumer goods in April was CNY 27,278.5 billion, up 10.68% over the same period last year, while the official announcement of the non-manufacturing purchasing managers index was 54.0, with OCED announced consumer confidence index came 100.9, an annual increase of 3.87%. Overall, domestic demand and external demand continued to expand, is expected to push the economic growth, but the growth strength in March slowed.

Domestic Situation: Manufacturing Industry Expansion/ Domestic Consumption Slowed Down

Global economy continued to improve, our exports in April amounted to USD 243.2 billion, up 9.39% over the same period last year. Exports continued to grow, driving the performance of our manufacturing sector, manufacturing index was 104.1 over the same period last year, increased by 0.79%, manufacturing purchasing managers index of 61, showing the manufacturing boom is still in the expansion trend. The wholesale sector was affected by export growth, with turnover reaching NTD 7,856.6 billion, an increase of 2.35%. The improvement of the production sector has led to the expansion of labor demand and the improvement of employment in the nation. Non-farm sector employment in April was 1,076.9 million, a net increase of 8.6 million over the same period last year, the unemployment rate was 3.67%, down 0.17% over the same period last year. The improvement in the labor market helped to raise domestic income and drive the performance of the business services sector. The retail sales in April were NTD 3,291.9 billion, an increase of only 0.4% from the same period last year, while the turnover of the catering industry was NTD 358.77 billion, an increase of 5.5% over the same period last year. In addition, the non-manufacturing purchasing managers' index was 56.3, indicating that the business services sector continued to expand. Overall, in April, driven by our export growth, the overall performance of the business services should be a reliable performance, but it is noteworthy that the retail industry turnover grew 0.4% over the same period last year, showing that the domestic consumption in the risk of slowing down. Indeed, the April ISI index score of 104 points, the signal just in line with the representative of the boom "trend of heat" in red and yellow light of minimum standards.

May and June ISI Forecast:

The United States continued to warm, the eurozone continued recovery, mainland China's consumer confidence continues to rise, coupled with the iPhone8 revision, component suppliers for the demand for equipment, coupled with the demand for components, is expected to drive China's export growth. IPhone8 suppliers for production of equipment needs, the first will drive the export of equipment in May, for the export of equipment wholesalers have contributed to the joint lifting of domestic equipment manufacturers related parts orders. Second, May's Mother's Day and the Dragon Boat Festival holiday will be expected to pour out department store retail and catering industry performance. The same month, Labor Day holiday is expected to drive China and other Asian tourists to travel to Taiwan, should be able to benefit from my retail and catering industry. However, changes in international raw material prices, as well as the appreciation of the New Taiwan Dollar, may offset the increase in the turnover of the wholesale sector because of the export of the equipment. In addition, the price of raw materials in May also have an impact on the performance of the retail and catering industry. The estimated value of the commercial services sector is 104 points, which is unchanged from April. June will be the iPhone8 industry chain early stocking and pull the impact of goods, and department stores in the anniversary of the revenue performance, the department of observation focus. However, the non-manufacturing purchasing managers' composition index in May, the inventory index increased by 2 percentage points compared with April, indicating that inventory is too high, new orders and incomplete orders to reduce the index, indicating that orders have slowed. Taiwan's inclusion in the United States included in the exchange rate manipulator watch list, the pressure on the appreciation of the New Taiwan Dollar against the US Dollar, will likely affect the export industry's export momentum. Based on the above factors, it is estimated that the business service sector indicator points will be down 1 point from the previous month and come to 103 points. The lights turn to green light representing "stable".