Experts says Taiwan IP to improve on a sequential basis

Taiwan's industrial production contracted by 1.4% y/y in June, which is revised lower to -3.5% from -3.2% in last month. While consensus was expecting -3.3% growth in this sector.

On a seasonally adjusted m/m basis, production rose 0.9% m/m (May: -2.3%; Apr: -3.7%), the first sequential increase in three months. This was helped by a smaller decline in electronics output, which was mirrored by better-than-expected exports to China in June. 

In addition, the headline increase in IP was helped by one more working day in June, compared with last year. Barclays expects the production to improve on a sequential basis in the coming months as see three supporting factors -

• 1) a stronger recovery in developed countries such as the US and Europe, which will likely revive demand for consumer electronics and machinery; 
  
  
• 2) stronger component production ahead of the launch of iPhone 6s (most likely September)
  
  
•  3) a gradual destocking of inventories of semiconductors and panels.