Taipei, July 23 (CNA)－Sentiment toward Taiwan’s economy continued to weaken in July, reflecting concerns over the local job market and the reduced willingness of people to spend, a monthly survey conducted by Cathay Financial Holding Co. has found.
Cathay Financial said investors also turned more cautious after the National Development Council’s index of leading economic indicators, which signals how the economy will fare in the next six months, fell in May for the sixth consecutive month.
Cathay Financial’s survey found that 16.7 percent of respondents said the economy had improved from six months earlier, while 49 percent of them said the economy was worse.
That translated to an economic optimism index for the economy of minus 32.3, even lower than the minus 28.1 reading seen in a similar poll conducted in June. It was the fifth consecutive month the index has moved lower.
The economic optimism index for economic conditions in the next six months also fell in July for the fifth straight month. After sliding to minus 29.6 in June, it sunk further to 32.7 in July, the index’s lowest level in 32 months, the survey found.
The weakening sentiment reflected concern over the local job market. The optimism index for the labor market now and over the next six months edged lower from minus 31.1 and minus 35.3 respectively in June to minus 32.8 and minus 36.9 in July, Cathay Financial said.
Affected by weakening sentiment toward the job market, the index gauging the willingness of consumers to spend on big ticket items fell from minus 0.7 in June to minus 8.5 in July, while the index on the willingness to purchase durable goods also dropped from minus 20.8 in June to minus 25.0 in July, Cathay Financial said.
Cathay Financial said that if people are less willing to spend on big ticket items and durable goods, it could hurt private consumption in the second half of 2018.
The weakening confidence in the economy combined with growing trade fiction between Washington and Beijing also led to caution over stock prices.
The optimism index toward the local stock market fell from minus 20.0 in June to minus 26.6 in July, while the index gauging investors’ appetite to take risks fell from minus 5.4 to minus 12.5, Cathay Financial said.
The survey found that almost 20 percent of respondents expected the weighted index on the Taiwan Stock Exchange, the Taiex, to fall to 9,000 points in the second half of this year.
That would be a rather precipitous fall, as the Taiex closed up 0.14 percent at 10,946.89 on Monday.
Cathay Financial said the average GDP growth expected in the July survey was 2.3 percent, indicating investors appear more cautious than the government.
In late May, the Directorate General of Budget, Accounting and Statistics (DGBAS) upgraded its growth forecast for Taiwan’s 2018 GDP by 0.18 percentage points to 2.60 percent.
The Cathay Financial survey, conducted June 1-7, collected 17,375 valid questionnaires online from clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.