Taiwan industrial output falls in May after rebound in previous month

25, Jun. 2019

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TAIPEI, NNA – Industrial production in Taiwan fell again in May after bouncing back the previous month from five months of contraction as the escalating U.S-China trade dispute weighed heavily on end-market demand and investor sentiment.

The Ministry of Economic Affairs released the latest industrial production data on Monday.

Key points:

―― May industrial production dropped 3.1 percent from a year earlier, dragged down by declines in all four sectors – mining and quarrying, manufacturing, electricity and gas supply, and water supply. Factory output in the first five months of the year dropped 3.0 percent on year.

―― Among the sub-sectors of the manufacturing sector, electrical parts and components posted a 5.5 percent decrease on year. That was mainly due to a 5.8 percent drop in the integrated circuit segment on weak demand for contract chip making and DRAMs as well as an 11.3 percent plunge in the liquid crystal panel and component segment, affected by capacity building in display panels and modules in mainland China amid sluggish demand for televisions and smartphones. January-May production for the sector fell 7.2 percent on year.

―― Output of computer electronic and optical products jumped 23.3 percent from a year earlier to a record monthly high, showing double-digit growth for an eighth straight month, buoyed mainly by production expansion of server, switch and router manufacturers on the island as well as robust demand for automotive electronics and 5G telecommunication devices. Production in the first five months of 2019 soared 27.5 percent on year.

―― Total manufacturing output slid 3.0 percent from a year earlier after a 0.9 percent increase in April, while slipping 3.1 percent in the January-May period on year.

Takeaway:

―― The ministry’s survey of manufacturers showed just 9.8 percent were upbeat about June’s industrial production, while 74.9 percent projected output would be flat. Both figures declined from the previous month, reflecting a less positive outlook.

―― Although negative growth in industrial production will continue in the second quarter, some manufacturers will step up efforts to expand domestic production amid uncertainties over the U.S.-China trade row, leading to a narrow decline in the island’s industrial production, the ministry said.