Industrial production dropped 4.94 percent annually last month, mainly because of soft demand for consumer electronics, which stalled production in the electronic components industry, the Ministry of Economic Affairs said yesterday.
Last month’s industrial production marked the seventh consecutive month of annual declines, the ministry said.
The government’s industrial production gauge measures output in five major industries: manufacturing, mining and quarrying, electricity and gas supply, water supply and architectural engineering.
The latest production gauge showed that output from the manufacturing sector — which accounts for more than 90 percent of industrial output — dropped 5.03 percent last month from the same period last year.
“The manufacturing sector’s inventory level was lower last month from a month earlier, due to the market’s weak demand for chips used in smartphones, as well as low output for DRAM and flat panels for notebook products,” Department of Statistics Deputy Director General Yang Kuei-hsien (楊貴顯) told a news conference.
The electronic components industry, which is the pillar of the nation’s manufacturing sector, saw an annual decline of 5.88 percent as the semiconductor industry continued to reduce its production in a bid to accelerate inventory digestion, Yang said.
Production in the computer electronics industry dropped 6.81 percent from a year earlier due to soft demand for handheld devices, tablets and notebook products, he said.
Because of excess supply, rising international competition and the sluggish Chinese economy, production of machinery goods and stainless steel plunged by a double-digit percentage from a year earlier, Yang added.
Yang said that although the manufacturing sector had put in great effort to lower inventory levels, soft market demand dragged inventory digestion.
“Due to the slow demand, the manufacturing sector’s inventory-to-sales ratio grew 3 percentage points monthly to 73 percent last month,” Yang said.
He said that only when the inventory-to-sales ratio drops below 65 percent would industrial production be considered to be at a healthy level.
For the first 11 months of the year, industrial production shrank by 1.23 percent from a year earlier, while the manufacturing sector’s output fell by 1 percent year-on-year, the ministry said.
Yang said industrial production this month could fall by between 5 and 6 percent annually because of a high comparison base in December last year.
In light of this, the ministry expects industrial production for the whole of this year to decline by about 1.5 percent from last year.
The ministry released revenue data from non-manufacturing sectors, showing that commercial sales from wholesale, retail and restaurant operators totaled NT$1.1776 trillion (US$35.577 billion) last month, down 2.29 percent from NT$1.2052 trillion last year.
Yang attributed the decline to a continued fall in revenue in the wholesale sector, which accounted for 67.52 percent of all commercial sales.
Wholesale revenue contracted by 4.5 percent to NT$795.2 billion last month from a year earlier, largely due to reduced orders from Japan for notebooks and TVs, Yang said.
Retail sales posted NT$348.9 billion last month, partly due to government stimulus measures, such as subsidies for energy-efficient home appliances.
Thanks to increases in wedding banquets and department store sales promotions, restaurant revenue reported its best sales month of the year last month at NT$33.5 billion, an annual increase of 3.1 percent, Yang said.
From January through last month, total commercial sales were NT$12.9391 trillion, down 2.44 percent from NT$13.264 trillion recorded in the same period last year.
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