Industrial output falls for fifth month

UNCERTAINTY::The economics ministry attributed the fall to the slow pace of the global economic recovery, intense market competition and the yen’s depreciation

By Helen Ku  /  Staff reporter

Wed, Jul 24, 2013 - Page 13

The industrial production index fell for the fifth straight month last month as output of communications products, machinery and steel contracted, the Ministry of Economic Affairs said yesterday.

Last month’s industrial output fell 0.43 percent year-on-year and 4.67 percent month-on-month, said the ministry, which had earlier predicted it would improve from May.

Production in the manufacturing sector — which accounts for more than 90 percent of total industrial output — dropped 0.55 percent year-on-year and 4.67 percent month-on-month last month.

For the quarter ending June, industrial production contracted 0.5 percent year-on-year, with manufacturing output falling 0.88 percent year-on-year, the ministry said.

Yang Kuei-hsien (楊貴顯), deputy director-general of the ministry’s statistics department, attributed the 0.88 percent decline in manufacturing output last quarter to macroeconomic uncertainties.

“Due to the slow pace of the global economic recovery, intense competition in the markets and the depreciation of the yen, the nation’s steel, petrochemical, machinery and communications output shrank last quarter,” Yang told a press conference.

“Components for flat panels and PCs also declined due to weak demand,” he added.

The industrial production results follow the release earlier this month of economic data which showed that exports rose 8.6 percent last month from a year ago, while export orders contracted 3.5 percent during the same period.

“The underlying message from this data is that global demand is still soft,” Moody’s Analytics associate economist Katrina Ell said in a statement yesterday. “We are cautiously optimistic there will be moderate improvement in the second half of this year.”

For the first six months of the year, industrial production increased 0.29 percent from the same period last year, with manufacturing output growing 0.13 percent from a year ago, the ministry’s report showed.

Among local manufacturing sectors, electronics — which accounts for nearly 30 percent of total manufacturing output — grew 2.93 percent from a year ago last month, driven by shipments of new smartphones and tablet computers, the ministry said.

The increase was also boosted by higher output of mobile device components, solar panels and LED photoelectric components, it said.

During the first six months of the year, electronics production increased 5.25 percent from a year ago, it added.

However, output of PCs and optical products contracted 15.03 percent last month from a year ago and declined 6.47 percent during the January-to-June period, which Yang attributed to stiff competition from high-end mobile devices and the growing popularity of tablet computers.

Yang said that industrial production this month should improve from last month, citing a ministry survey that showed 53.7 percent of manufacturers expected production value to grow this month and 47.7 percent forecast that production volume would also increase.

On the domestic front, combined revenue for the wholesale, retail and restaurant sectors fell 0.3 percent to NT$1.19 trillion (US$40 billion) last month from a year ago, the ministry said in a separate report.

However, driven by strong sales of cold drinks and ice cream, retailers and restaurants reported annual growth of 3 percent and 3.4 percent in their sales last month respectively.

In the first half of the year, accumulated domestic sales were flat from last year’s levels at NT$6.97 trillion, the ministry said.