World Economy

Taiwan Service Sector Stable

Taiwan Service Sector StableTaiwan Service Sector Stable

Taiwan’s service sector remained stable in January, flashing a “green light” for the 11th consecutive month, according to the Commerce Development Research Institute (CDRI).

The CDRI, one of Taiwan’s leading economic think tanks, said in report that its index of service industry (ISI) stood at 101, down two points from a month earlier, but continued to flash a stable green light, Focus Taiwan reported.

The ISI, which assesses conditions in the service sector, flashes a green light when the index is between 100 and 103.

The CDRI uses a five-color system, in conjunction with the ISI, to describe the climate of the local service sector, focusing on three major segments – securities trading, the labor market and wages, and business operations.

Red signals overheating, yellow-red indicates slight overheating, green represents steady growth, yellow-blue signals sluggishness and blue indicates recession.

The month-on-month drop of the ISI reflected the fact that many consumers postponed their purchasing plans from January to February, the month of the Lunar New Year holiday, the think tank said.

However, consumer confidence remained strong amid falling international crude oil prices and an increase in foreign tourist arrivals in Taiwan, the think tank said.

The drop in the ISI for January was limited, the CDRI said, noting that the index had flashed a green light for the 11th consecutive month. It said the securities trading sub-index rose one point from a month earlier to 101 since the equity market was awash in liquidity, which boosted buying interest at a time when major central banks were trying to ease monetary policies to stimulate the economy.

Buying in the local bourse was also lifted by expectations that the government would lift the ceiling on the daily movement of stock, from the current 7 percent to 10 percent in the near future, the research group said.

The sub-index for the job market remained unchanged in January at 101 as rising employment offset the effects of wage stagnation, the CDRI said.

The think tank said the sub-index for business operations fell three points from a month earlier to 100 in January in reflection of slower revenue growth in the sector.

The ISI for February is expected to continue to flash a green light mainly as result of strong buying before and during the Feb. 18-23 Chinese New Year holiday.