The local service sector remained in the doldrums in March, with the index that gauges the climate of the sector pointing to a slowdown.
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This is according to the Commerce Development Research Institute (CDRI).
In a monthly report, the think tank said that the index of service industry (ISI) stood at 98 points in March, five points higher than in the previous month, but continued to flash a yellow-blue light that signaled sluggishness.
The CDRI uses a five-color coded system, coupled 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.
In March, Taiwan's ISI remained in the 93-99-point range, flashing a yellow-blue light for the fifth consecutive month.
One of the local sectors that slowed down in March was consumption and investments, due mainly to a 13 percent year-on-year decline in sales in the first quarter by Apple Inc., which has many Taiwanese high-tech firms in its supply chain, the CDRI said.
Apple's sales drop affected shipments by its Taiwanese suppliers, which had an indirect adverse effect on the service sector, the think tank said.
It said Apple's Taiwanese suppliers account for at least 30 percent of total sales in the local manufacturing sector and 20 percent of the total capitalization in the local equity market.
A decline in the number of Chinese tourists to Taiwan also affected sales in the local retail, dining and logistics sectors, while market sentiment toward the local stock market appeared weak ahead of the May 20 power transition in Taiwan, the CDRI said.
In March, the sub-index for securities trading remained unchanged from February at 97, while the trading volume and value on the local equity market rose slightly, the CDRI said.
It said the sub-index for the labor market and wages rose one point in March from a month earlier to 99, based on an increased number of newly hired workers and overtime working hours.
The sub-index for business operations, meanwhile, rose two points in March from the previous month to 101, largely because of a relatively low comparison base in February, the CDRI said.
While revenue from leasing, dining and wholesale/retail businesses recovered in March, cargo delivery by ground transportation declined, the think tank said.
It projected an ISI of 95 points for April, still in the yellow-blue range, but said the index is likely to pick up in May and June, with the approach of the wholesale peak season and the launch of new handheld devices, which is expected boost consumption. ■