Small seasonal drop likely in Taiwan's September IP

Taiwan's industrial production (IP) growth weakened for the fourth consecutive month to -5.5% yoy in August, the lowest reading in 30 months. Weakness mainly came from industrial supplies and machinery. 

The sharp slowdown in mainland China's secondary industry might be the culprit. That said, China's import volume of most industrial metals and energy increased in September, indicating signs of recovery in its domestic demand. 

"Hence, a smaller seasonal drop is expected in Taiwan's IP in September. However, a negative base effect is likely to have dragged the headline growth rate down further to -5.8% yoy in September from -5.5% yoy in August", says Societe Generale. 

On average, IP growth is likely to have seen a faster fall of 4.6% after the 1.1% drop in Q2. This suggests GDP growth probably weakened again in Q3, dipping below 0.5% yoy.