Taiwan industrial production snaps 12-month loss on subdued global demand

Taiwan’s industrial production for the month of May rose, snapping a losing streak observed over the past 12 months, caused by a period of soft global demand for its products and components. The better-than-expected IP data certainly bodes well for the GDP outturns. It augments the chance that GDP growth will turn positive y/y in 2Q, ending the recession over the past three quarters, DBS reported.

Industrial production rose 1.89 percent from a year earlier, data from the Ministry of Economic Affairs showed Thursday. The increase compared with a median forecast for a 1.1 percent fall by economists polled by The Wall Street Journal and April's revised 3.57 percent drop. On a month-over-month basis, industrial output rose 5.69 percent.

Production of electronic parts and components, the largest weighted item in the index, rose 4.92 percent, powered by a 7.27 percent increase in semiconductor output. Production of computers, electronics and optical products also rose 2.25 percent. Machinery and equipment output was still among the largest sliders, falling 12.64 percent.

Apart from industrial production, the other key indicators, including export orders and manufacturing PMI, have not showed a similar turnaround.

"Fundamental wise, we also think that the external demand outlook remains lackluster as growth in major economies (e.g., G3 and China) is stuck at low levels," DBS commented in a report.

While Taiwan's economy has been battered by the slowdown in China, its largest export market and weak global demand, the latest data suggest that the economy is finally starting to ramp up production again.