Industrial production fell back into negative growth last month, dropping 3.05 percent year-on-year, after growth of 1.04 percent in April, the Ministry of Economic Affairs said yesterday.
Although all sectors saw declines of more than 2 percent, the main cause was the 3.01 percent drop in the manufacturing sector, it said.
Last month’s performance was even greater than DBS Bank Ltd’s (星展銀行) estimate of a 1.7 percent contraction.
Despite the decline across the manufacturing sector, the output of the computer, electronic goods and optical components industry stood out with a year-on-year increase of 23.3 percent, a double-digit growth for an eighth month in a row, the ministry said.
The increase was largely the result of companies expanding production capacity of servers, routers and networking switches, as well as wireless communication equipment in Taiwan.
“We expect companies to continue moving production sites back to Taiwan amid the unresolved [trade] conflict between the US and China,” Department of Statistics Deputy Director-General Wang Shu-chuan (王淑娟) told a news conference in Taipei.
The electronic components industry’s production dropped 5.5 percent due to withering demand for integrated circuits amid the lingering inventory adjustments and an oversaturated DRAM market, the ministry said.
A decrease in the output of LCDs and related components also contributed to the industry’s decline as China continues to increase production, it said.
Production in traditional industries such as base metal and machinery equipment dropped 9.57 and 16.86 percent respectively as global demand slowed due to the US-China trade war, the ministry said.
The chemical materials industry’s output contracted by 3 percent, reflecting falling crude oil prices, while the production of styrene and aromatic hydrocarbons declined due to routine plant maintenance, it said.
Automobile and auto parts production shrank by 6.01 percent, which the ministry attributed to a high comparison base last year and rising demand for imported vehicles.
For the first five months of the year, total industrial production declined 2.98 percent, of which the manufacturing sector declined 3.12 percent from the same period last year, it added.
The latest industrial production data came on the heels of recent economic gauges pointing to challenges ahead for the economy, while a ministry survey of industries in the manufacturing sector showed that companies expect production to remain on a downward trend this month.
However, the ministry said it expects a general amelioration of industrial production in the third and fourth quarters.
“The main factor remains the US-China trade dispute,” Wang said, adding that overall production would improve following Taiwanese companies’ relocating production back home.
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