Taiwan: Industrial production growth jumps in January on low base effect
Industrial output grew 10.9% in annual terms in January, shooting up from the revised 1.4% expansion registered in December (previously reported: +1.2% year-on-year). This reading vastly overshot analysts’ expectations of a 5.0% growth rate. However, it is important to note that the magnitude of the year-on-year growth surge in January is partly explained by a low base effect, as the Lunar New Year fell in January last year, which moderated industrial production. In 2018, the Lunar New Year happened in February, so it is likely that February industrial production growth will be negative due to a lower number of working days in the month this year.
Manufacturing production, which accounts for more than nine-tenths of total industrial output, expanded 10.8% year-on-year in January, up from December’s 1.1% rise. All sub-components of the manufacturing index saw output growth increase in the month, again due to the low base effect compared to 2017.
Given the large one-off swings in the annual data, the month-on-month figures offer complementary insights on how well the industrial sector performed at the beginning of the year. On a seasonally-adjusted basis, industrial output grew 1.0% over the previous month in January, doubling the growth pace from December’s 0.5%. Annual average growth in industrial production, meanwhile, was 3.7%, up from 3.0% in December.