TAIPEI -- Taiwan's economy remained sluggish in July, as indicated by the latest index gauging the business climate, which was released by the island's economic regulating department Thursday.

The composite index of monitoring indicators flashed a "yellow-blue light" in July for the fifth consecutive month, though the index increased by two points from June to 21 points, suggesting that the economy maintained a tendency toward recession, the department said in a press release.

Under Taiwan's five-color system to assess the economy, a blue light (9-16 points) indicates a contraction, a yellow-blue light (17-22) means sluggishness, a green light (23-31) signals stable growth, a yellow-red light (32-37) suggests a warming economy and a red light (38-45) points to an overheated economy.

Out of the nine factors in the composite index for July, four changed, and five remained unchanged. The sub-index for industrial production flashed a yellow-blue light, compared with a green light in June, while the sub-index for business sentiment among manufacturers turned from blue to yellow-blue.

The sub-indexes for stocks and imports of machinery and electrical equipment both changed from green to yellow-red in July.

The trend-adjusted leading indicator, which is composed of seven sub-indexes to predict changes in the economy, increased by 1.23 percent to 102.39 points in July, suggesting weakening impacts from the COVID-19 epidemic on the economy, the statement said.

Taiwan witnessed improvements in local consumption and exports in July but the economy may continue to struggle since the COVID-19 pandemic remains severe across the world, the statement said.