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What is the significance and function of business cycle indicators and monitoring indicators?

列印圖示

Business cycle indicators and monitoring indicators are intended to measure economic situations, where important macroeconomic variables that sufficiently represent economic activities and reflect economic changes are processed and compiled through appropriate statistical methods. The National Development Council has released three types of business cycle indicators, including leading, coincident, and lagging indicators; the monitoring indicators (monitoring lights) have also been released to provide a measure for all sectors when measuring the economic pulse of our country. The significance and functions of the business cycle indicators and monitoring lights are as follows:

  1. Leading Indicators

They comprise seven components: diffusion index of export orders (by number of firms), real monetary aggregate M1B, TAIEX average closing price, net accession rate of employees on payrolls of industry and services, total floor area of new housing construction started (residential houses, commercial offices, industrial warehouses), real imports of semiconductor equipment, and the TIER manufacturing sector composite indicator, which are used to predict changes in the future economy. 

  1. Coincident Indicators

They comprise seven components: industrial production index, electric power consumption, index of producer’s shipments for manufacturing, sales of trade and food services, average monthly overtime hours of industry and service, real customs-cleared exports, and real imports of machinery and electrical equipment, which are used to measure current economic situation.

 

  1. Lagging Indicators

They comprise five components: unemployment rate (reciprocal), the manufacturing unit output labor cost index, interest rates for new loans at the nation's 5 major state-run banks, loans and investments of financial institutions, and inventory value for manufacturing, which are used to verify economic fluctuations over the past.

  1. Monitoring indicators

The monitoring indicators are five different lights similar to traffic signals, which indicate the current economic situation. In particular, “green light” represents stable economy; “red light” represents an economic boom; “blue light” represents sluggish economy; “yellow-red light” and “yellow-blue light” are transitional lights, which suggest that attention should be paid to whether there are following economic turns. Changes in the monitoring indicators shall also serve as a reference for determining economic ups and downs. The current monitoring indicators compiled by the National Development Council consist of nine components: monetary aggregate M1B, TAIEX average closing price, industrial production index, average monthly overtime hours of industry and service, customs-cleared exports, the imports of machinery and electrical equipment, index of producer’s shipments for manufacturing, sales of trade and food services, and the TIER manufacturing sector composite indicator.
 

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