Taiwan’s industrial production index fell 6.15 percent to 105.85 points last month from a year earlier, as the declining output in the electronics component industry took its toll, the Minister of Economic Affairs said yesterday.
“The nation’s manufacturing sector reduced production last month in an effort to accelerate inventory digestion,” Department of Statistics Deputy Director-General Yang Kuei-hsien (楊貴顯) told a news conference.
The contraction last month expanded from a 5.3 percent annual decline recorded in September and was the largest drop since March 2013, the data showed.
Photo: Huang Pei-chun, Taipei Times
The annual decline in the industrial production index was deeper than DBS Bank Ltd’s forecast of a 4.9 percent decline.
Yang said production in the semiconductor segment, the pillar of the nation’s electronics component industry, fell 11.58 percent last month from a year ago, which was the largest decline since January 2012.
The semiconductor industry’s drop in output marks the third consecutive month of annual decline, and was mainly due to high inventory levels caused by weak end demand for consumer electronics, Yang said.
However, due to manufacturers’ efforts to reduce production, the semiconductor industry’s inventory-to-sales ratio improved significantly last month, he said. In addition, strong demand for Taiwanese-made semiconductors in China and the US helped boost inventory digestion last month, Yang added.
Yang said the inventory-to-sales ratio for the manufacturing sector, which includes the semiconductor segment, was less than 70 percent last month, a marked improvement from 75 percent in August and September.
The ministry is optimistic that the ratio would return to a healthy level of 65 percent in the near term, Yang said.
“We expect inventory digestion in the manufacturing sector to be complete before the end of this year,” he said.
Despite the accelerating inventory digestion, this month’s industrial production index is expected to register an annual drop due to last year’s high base of 107.4 points, Yang said, adding that he foresees the contraction narrowing to less than 5 percent.
In a separate release, the ministry said that domestic commercial sales dropped by 2.66 percent from last year’s NT$1.21481 trillion to NT$1.2148 trillion (US$37.062 billion to US$37.061 billion) last month because of a continued fall in revenue in the wholesale sector.
Dragged down by declining orders for machine goods and the falling average selling price of stainless steel, wholesale sector revenue fell by 4.4 percent year-on-year to NT$824.4 billion last month, Yang said.
The wholesale sector contributed 67.86 percent of total commercial sales last month.
The retail sector reported 0.6 percent annual growth to NT$355.5 billion last month, driven by strong annual promotional events held by department stores, he said.
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