The industrial production index contracted 4.93 percent year-on-year last month, marking the fastest decline in three-and-a-half years, attributable to global economic headwinds and an ongoing inventory correction cycle, the Ministry of Economic Affairs said yesterday.
The manufacturing production index plummeted 5.26 percent annually, marking the steepest drop since March 2019, the ministry said.
The LCD panel sector experienced the largest slump — 47.95 percent year-on-year last month — ministry data showed.
Photo: CNA
Industrial and manufacturing production indices dipped for a third straight month last month, the data showed.
“The indices were adversely affected by weak outbound demand for goods made by local manufacturers, given a staggering world economy,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said.
“Additionally, manufacturers have lowered factory utilization to cope with customers holding high excess inventories,” Huang said.
The ministry expects the situation to deteriorate next month, and no sign of improvement is visible, as high inflation, an energy crisis and the US-China trade dispute continue to crimp demand, he said.
In addition, spikes in COVID-19 infections in China could lead to a labor shortage and depress factory usage, triggering a new wave of production disruptions, Huang said.
“We thought China’s easing of COVID-19 measures would have given a boost to manufacturing output,” he added.
However, local makers of servers and high-end computers should experience a milder impact from China’s difficulties going forward, as they have reallocated production outside of China and built new production lines in response to the US-China trade dispute, Huang said.
The manufacturing production index this month is expected to fall between 7 and 9.7 percent from December last year, Huang said.
For the full year, the index is forecast to rise between 0.8 percent and 1.1 percent, he said.
Last month’s downtrend is likely to extend into next month as the Lunar New Year holiday reduces working days, Huang said, adding that a higher base in January this year is also a contributing factor.
The electronic component sub-index gained 1.02 percent year-on-year last month. Semiconductor production expanded 13.25 percent year-on-year due to robust demand for 12-inch wafers and advanced technologies.
The production of computers and optical components rose 4.8 percent year-on-year, attributable to strong demand for cloud-based servers, networking devices and computer-related components.
An easing in component supply also helped, the ministry said.
The petrochemical sector saw production sink 25.87 percent year-on-year, dragged by a global economic slowdown and sluggish market demand.
Manufacturers have reduced production to cope with the slump, the ministry said.
The production of basic metals plummeted 21.86 percent year-on-year last month, while the machinery sector saw production shrink 13.68 percent annually.
The production of automotive components increased 6.03 percent year-on-year as vehicle distributors launched sales promotions to stimulate demand ahead of the Lunar New Year holiday.
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