Taiwan’s industrial production index dropped for a third consecutive month, last month and is expected to face another annual decline this month as there is no growth catalyst, the Ministry of Economic Affairs said yesterday.
The industrial production index fell by 2.99 percent annually to 109.16 last month, mainly due to slowing growth in the semiconductor industry and falling output in the machinery industry because of soft global economic growth, the ministry said.
“As negative factors persist, the ministry expects this month’s industrial production output to drop by 2 percent to 3 percent from a year ago,” Department of Statistics Deputy Director-General Yang Kuei-hsien (楊貴顯) told a news conference.
Yang said the key to increasing the nation’s industrial output is the pace of inventory digestion in the manufacturing sector, especially in the semiconductor industry, which is the pillar of the sector in Taiwan.
Citing the ministry’s monthly survey of local manufacturers, Yang said the inventory-to-sales ratio for the manufacturing sector was about 71 percent last month, an improvement of one percentage point from June’s 72 percent.
Yang said that as some key industries in the manufacturing sector, such as the semiconductor and optical component industries, were slowly increasing their production last month, the ministry is optimistic that the inventory-to-sales ratio can return to a healthy level of between 60 percent and 65 percent sometime in the remainder of the year.
The launch of Apple Inc’s new iPhone models and the upcoming Christmas holiday season might spur demand for consumer electronics and benefit the production growth of Taiwan’s semiconductor and optical module industries in the second half of this year, he said.
However, Yang said local manufacturers need to closely monitor the outlook of the global economy, as well as international crude oil and steel price trends, which are the key variable factors affecting the outlook of Taiwan’s manufacturing sector.
In a separate release, the ministry said that domestic commercial sales fell for a fifth straight month last month, plunging 4.4 percent to NT$1.1892 trillion (US$36.1 billion) from a year ago, dragged down by falling revenue in the wholesale sector.
The 4.4 percent decline marked the largest drop in the past 29 months, the data showed.
Revenue in the wholesale sector, which contributed 68.68 percent of total commercial sales, plunged 5.7 percent to NT$816.8 billion last month from a year ago, mainly due to a continuous fall in purchases from Japan and weak demand for PC-related products, Yang said.
Sales in the retail sector also dropped by 1.9 percent annually to NT$336.1 billion last month, with fuel revenue plunging 23.8 percent because of falling international crude prices, he said, adding that weak jewelry sales also affected the retail sector’s sales performance.
However, revenue in the food and beverage sector increased by 2.9 percent to NT$36.3 billion from a year ago, driven by a growing number of restaurant chain locales and strong sales of beverages due to warm weather, Yang said.
Looking ahead, Yang said this month’s commercial sales are expected to drop from last year’s NT$1.2064 trillion, as he forecasts that the wholesale sector is likely to continue to be affected by fewer purchases from Japan.
However, he said the ministry expects the scale of annual decline this month to be less than last month’s 4.4 percent on the back of the shopping for Ghost Month, the seventh month of the lunar calendar, providing a boost to sales in the retail sector.
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