Taiwan: Industrial output records lowest growth since May 2020 in February
March 23, 2021
Industrial output grew 3.0% in February (January: +19.0% yoy). The outturn marked the worst reading since May 2020. The deceleration was primarily driven by weaker manufacturing output. In addition, water supply production contracted.
On a seasonally-adjusted monthly basis, factory output rose at a quicker rate of 4.4% in February (January: +3.2% mom), the best result since April 2019. Meanwhile, the trend pointed down, with the annual average growth of industrial production coming in at plus 7.5% in February, down from January's 9.0%.
February’s weak growth was likely largely due to the Lunar New Year base effect, although Iris Pang, China economist at ING, pointed to another possible cause:
“Water is an essential natural resource for semiconductor production. Since the middle of last year, Taiwan has suffered from less rainfall than the historical average. This has started to make semiconductor factories nervous when they have more semiconductor orders. […] When you've got a water shortage alongside a major holiday, the factories chose a wait-and-see approach to see if the rains would come.”