Factory output contracted last month from a year earlier, while companies in the commercial sector reported lukewarm activity, indicating the economy was losing steam amid the slowing global economy at the close of the first quarter.
However, forecasters said an anticipated stronger global economy in the second half of the year should have a positive effect on the nation’s factory output and domestic trade.
Manufacturing output fell last month, down 3.77 percent year-on-year after rising 8.22 percent in February, the Ministry of Economic Affairs (MOEA) said yesterday in a report.
The decline in manufacturing output, which accounts for more than 90 percent of the nation’s total factory output, dragged down the overall industrial production last month to 3.42 percent year-on-year, following a revised 8.35 percent increase in the previous month, the ministry’s data showed. On a monthly basis, industrial output increased 12.98 percent last month, data showed.
Katrina Ell, an associate economist at Moody’s Analytics, said excluding seasonal distortions, last month’s 3.42 percent decline showed industrial production was stronger than expected, compared with a median forecast of a 6.5 percent decline by economists polled by Dow Jones Newswires and an average decline of 6.3 percent in a Bloomberg News survey.
“[It] signals momentum is improving but is still weak,” the Sydney-based Ell said in a note yesterday. “Forward-looking indicators suggest a recovery in global tech demand in the second half.”
Last Friday, the MOEA said first-quarter export orders increased slightly by 1.46 percent to US$103.81 billion from a year ago, while the Ministry of Finance said on April 9 that exports shrank 4 percent year-on-year to US$70.83 billion in the first three months.
The latest industrial production data maintained the same signal that economic growth momentum was facing headwinds in the first quarter, as factory output fell 3.06 percent quarter-on-quarter and 4.68 percent year-on-year, according to the MOEA.
For this quarter, the MOEA said the industrial sector appeared to have enough momentum to expand from the first quarter, citing a poll it conducted on Wednesday and Thursday last week, which showed 15.64 percent of manufacturers felt optimistic about the second-quarter outlook, compared with 3.21 percent of those who were bearish about industrial prospects, with the remaining 81.15 percent saying the situation would remain unchanged.
However, Huang Ji-shih (黃吉實), director-general of the economics ministry’s statistics department, told reporters it was still unclear whether industrial output in the second quarter would move back to positive territory on an annual basis, citing worries about the ongoing debt problems in the eurozone and the impact of prices of petroleum-based fuel products being raised this month and higher electricity rates next month.
A separate report released by the MOEA on domestic commercial trade also provided mixed signals.
Domestic commercial sales — including retail, wholesale and food and beverage services — fell 1.06 percent year-on-year to NT$1.188 trillion last month, following an increase of 6.4 percent in February because of the Lunar New Year holiday, the report said.
The latest data showed that sales in the wholesale sector registered the biggest annual decrease of 2.83 percent to NT$851 billion last month as the lackluster global economy hit export-oriented industries, which had a negative impact on wholesale firms. Meanwhile, companies in the retail sector saw sales grow 3.35 percent year-on-year to NT$306.1 billion and those in the food and beverage sector increased 7.42 percent to NT$30.9 billion, the report showed.