Commerce Development Research Institute released the Business Cycle Coincident Composite Index for Taiwan Service Sector today (3rd April), it has been predicted that it will continue to decline slowly in August. This is the 15th month of the declination of the actual value since the peak in May last year. Although it is predicted to rebound slightly in May and June this year, it will continue to decline in July and August, but the decline will slow down. The forecast value in February this year has started to fall below the long-term trend value (100), and it is predicted that it will fall again in August, which means that the economy is entering the recession slowly. Although the current slope is relatively mild compared to the previous cycle index, which means that there is no risk of the sudden drop; it also indicates that the anti-ageing measures government is implementing are useful, and should be enhanced.

  This system is used to predict the leading index of the coincident composite index. The actual value of the composite cycle index fell from the peak in March last year. It declined again in November and December though rebounded in September and October. It has continued to rise again in January, February and March this year, showing that although the economy is fluctuating, there is a sign for the upturn. Since it bottomed out in July 2016, it has not gone back to the long-term trend (100). It shows that the strength of the recovery is weak.

The recent trend of Coincident indicator cycle index

A. The actual value of Cyclical Leading Composite Index for service industries (long-term trend excluded) peaked in March 2018 and then fell. Its cycle index has fallen from 98.7 in March to 97.5 in August and rebounded to 97.6 in September and October. However, it fell to 97.4 and 97.3 in November and December, but it has risen for three consecutive months in Q1 this year. The index increased to 97.5, 97.9 and 98.3 respectively. It shows that the leading indicators are at a low point, and they have stopped falling, and the increase is accelerating.

B.   The trend across the various sectors in sub-indicators of the coincident indicators, the composite index has continued to decline in June 2018, and the declination accelerated in Q4, it is predicted that the cycle index will be lower than the long-term trend (100) in January this year and keep falling. After a slight quake in May and June, it is predicted that it will drop to 99.82 in August. The declination is slowing down yet still no sign for rising.

Business Cycle Composite Index for Taiwan Service Sector 

Source： Business Cycle Forecasting Team, CDRI

Source： Business Cycle Forecasting Team, CDRI

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(Business Cycle Indicator System is designed, instructed and analysed by professor Tain-Tsair Hsu)