Sequential improvement continues in Taiwan's industrial production

Taiwan's industrial production dropped 4.94% yoy in November, which came in better than expectations. There was a minor downward revision in October to 6.3%.

Headline number was weighed down by elevated inventory levels along with temporary refinery suspensions, which led to low petroleum refining activity in November, balanced by one extra working day.

November industrial production posted a third straight positive print on a seasonally adjusted basis , but the pace of improvement is beginning to moderate at marginal level. Production improved by 0.1%mom sa following October gain.

This reflected relatively modest festive demand this year, which weighed on production in still elevated inventories and increasing concerns about geopolitical events.

The inventory levels are continuing to show signs of clearance, as seen in moderate drop of inventory to shipment ratio, which dropped to 1.16 times in October from an after crisis high of 1.25 times in August.

"As inventories continue to get cleared, we look for a sequential improvement in activity, supported by stabilising demand conditions in China and the US", says Barclays in a research note.