The production value of the manufacturing sector is expected to contract for the sixth consecutive quarter this quarter, mainly due to sluggish global demand for consumer electronic devices, the Ministry of Economic Affairs said yesterday.
“This quarter is expected to see anther annual drop in production value, but the size of the decline will be slightly smaller than last quarter’s 13.79 percent,” Department of Statistics Deputy Director-General Yang Kuei-hsien (楊貴顯) said by telephone.
Prices of international crude oil and stainless steel are higher than last quarter, which could improve the demand for petrochemical and stainless steel production this quarter, Yang said.
Resumed production of billet and hot-rolled steel at local mills following annual maintenance would also help shrink the size of the annual contraction in production value this quarter, he said.
In addition, the number of working days this quarter is more than last quarter, Yang said.
However, whether the scale of the annual decline this quarter could narrow to below 10 percent would mainly be determined by global demand for the nation’s electronic components, he said.
Yang said the electronic components industry is digesting inventories at a slow pace due to soft demand for consumer electronics goods worldwide, which would likely affect the production value of the industry this quarter.
Suppliers of electronic components should lower their inventory-to-sales ratios by at least 3 percentage points to 45 percent in a bid to return to a healthy level and increase production, Yang said.
Yang said there might be a chance for the manufacturing sector’s production value to swing back to positive next quarter, due to a lower base last year.
As the third quarter is usually the peak season for the nation’s electronics component industry, Yang said the anticipated increase in production could help boost production value next quarter.
Last quarter, the manufacturing sector’s production value declined 13.79 percent annually to NT$2.82 trillion (US$86.1 billion), representing the fifth consecutive quarter of annual drops.
Yang attributed the double-digit percentage fall to lagging sales of consumer electronics goods worldwide, leading the falling production for the electronics component industry.
The electronics component industry’s production value fell 13.79 percent annually to NT$803.6 billion last quarter, contributing about 3.93 percentage points to the manufacturing sector’s 13.79 percent in the January-to-March period, Yang said.
Basic metal plunged 30.66 percent year-on-year to NT$252.6 billion last quarter, contributing about 3.41 percentage points to last quarter’s total production value, he said.
The magnitude 6.4 earthquake in the south affected production of the manufacturing sector last quarter, Yang added.
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