Taiwan: Decline in industrial output softens in May
Industrial production fell 15.7% year on year in May (April: -22.6% yoy). May’s softer drop was due to softer declines in energy and manufacturing. However, May’s reading was still the third straight double-digit contraction, and industrial output is down 18% annually in the first five months of the year. Weak global electronics demand and a drawdown of inventories have hurt activity in recent months.
On a seasonally adjusted monthly basis, industrial output rose 3.0% in May (April: -4.8% mom), the best result since February 2022. Meanwhile, the trend pointed down, with the annual average variation of industrial production coming in at minus 10.9%, down from April’s minus 9.5%.
Looking ahead, the decline in industrial output should soften as the base effect grows more favorable, although a double-digit decline is still forecast over 2023 as a whole.
Analysts at the EIU said:
“Separate data on export orders, which serve as a near-term bellwether for manufacturing activity, are also lacking any sign of an early exit from the doldrums. Overall export orders dropped by 17.6% in May, with orders from China (-20.9%), the US (-13.5%) and Europe (-34.9%) staying deep in contraction. These trends indicate that the electronics downcycle has not bottomed out, amid high levels of inventory and fewer overseas orders.”