Industrial production posted its first annual contraction in nine months last month as weaker-than-expected growth in the manufacturing sector failed to make up for a nosedive in electricity output, the Ministry of Economic Affairs said yesterday.
Industrial output last month fell 0.59 percent from a year earlier, dragged by a 30 percent annual decline in the electricity sector after Taiwan Power Corp (台電) shut down two nuclear reactors, the ministry said.
The results were disappointing, as the ministry had anticipated a 7 percent annual growth.
The manufacturing sector, a pillar of the nation’s industrial output, posted tepid growth in output of 0.79 percent year-on-year last month, marking the slowest pace in about a year, due to inventory correction, the ministry said.
“The strength in the manufacturing sector dwindled last month and failed to support industrial output,” Department of Statistics Deputy Director-General Wang Shu-chuan (王淑娟) said told a news conference in Taipei.
“Semiconductor and LCD panel makers suffered the brunt of the weakness, as customers were digesting excess stock, leading to reduced orders,” Wang said.
As a result, the output of the electronic components segment, the biggest contributor to manufacturing output, grew just 5.34 percent from a year earlier, the least in about a year, ministry statistics showed.
In addition, shortages of key components such as NAND flash memory chips has cut production of solid-state drives, while increasing global competition has trimmed the production of smartphones and virtual-reality devices, the ministry said.
However, a survey conducted by the ministry showed that growth momentum is expected to pick up gradually from this month, on the back of inventory buildup demand ahead of the launch of new devices by Apple Inc, Chinese handset makers and chip designers, Wang said.
“We are not too worried. The negative factors are only short-term. Demand will bounce back this month and next month before seasonal demand returns in the second half,” she said.
Growth will primarily come from advanced chips and chips used in Internet-of-Things, cloud-enabled equipment and cars, the ministry said.
Industrial output is expected to be flattish this month from a year earlier, Wang said.
On a monthly basis, there will be a rebound, she said.
In a separate statement, the ministry said that wholesale revenue rose 2.4 percent year-on-year to NT$785.7 billion (US$26.05 billion), benefiting from improving demand for phone and memory chips, and servers, while increasing prices for LCD panels helped lift the overall revenue of the machinery tool segment, which rose 6.1 percent year-on-year.
Revenue in the retail sector rose 0.4 percent annually to NT$329.2 billion, with the strongest growth coming from supermarket operators, supported by outlet expansions and higher-priced products, the statement said.
Sales in the restaurant and beverage sector rose 5.5 percent to NT$35.9 billion from a year earlier, attributed to promotions for Tomb Sweeping Day, new brand launches and price hikes, the statement said.
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