Fixed-asset purchases, excluding land, by the manufacturing sector in the final quarter of last year fell for a fourth consecutive quarter, as firms remained conservative about investment amid weak end-market demand and global macroeconomic headwinds, the Ministry of Economic Affairs said in a report the week.
The ministry also attributed the quarter’s slump to a higher comparison base during the same period a year earlier, when some semiconductor companies completed equipment installations, the report said.
The purchases fell 37.2 percent year-on-year to NT$428.7 billion (US$13.28 billion) during the October-to-December quarter, following annual declines of 31.9 percent in the third quarter, 16.2 percent in the second quarter and 3.3 percent in the first quarter, the report released on Wednesday showed.
Photo: Ritchie B. Tongo, EPA-EFE
On a quarterly basis, the fourth-quarter purchases increased 11.4 percent, reversing a 14.6 percent decrease in the previous quarter, the report said.
Meanwhile, total revenue brought in by the manufacturing sector, including overseas production, also fell 6.3 percent annually in the fourth quarter of last year to NT$8.13 trillion, as firms faced sluggish end-market demand and continued inventory destocking in the supply chain, the report said.
Overall revenue last year as a whole dropped 11.3 percent to NT$30.85 trillion, it said.
Fixed assets include machinery, equipment, buildings and construction projects, as well as furniture, fixtures and vehicles.
For the whole of last year, fixed-asset purchases fell 23.7 percent year-on-year to NT$1.73 trillion, the report said.
Rising demand for emerging technologies and applications, as well as continued upgrading of production facilities, should boost investment momentum in the manufacturing sector this year, the ministry said.
However, manufacturers would remain cautious about their capital spending as the global economy’s pace of recovery remains slow, it said.
The electronic components industry was the best performing industry in the fourth quarter of last year with purchases of NT$228.3 billion in fixed assets, accounting for 53.2 percent of total purchases by local manufacturers, the report showed.
However, the figure was 54.2 percent lower than a year earlier as end-market consumption of electronics remained weak and semiconductor companies continued to slow their investments, it said.
The chemical materials industry was second in terms of fixed-asset purchases as firms spent NT$29.9 billion, down 4.9 percent year-on-year, the report showed.
The ministry attributed the decrease in purchases to a higher comparison base a year earlier and some firms slowed their capital expenditure on projects related to the circular economy, the report said.
The oil and coal production industry made NT$24.4 billion in fixed asset purchases, up 68.1 percent from a year earlier, as state-owned enterprises stepped up major development projects and major players continued to make investments related to process improvement, it said.
The metal products and the computer and optoelectronics industries also posted decreases in fixed asset purchases in the fourth quarter, down 2.1 percent and 1.1 percent to NT$17 billion and NT$15.6 billion respectively from a year earlier, the report said.
Nonetheless, the machinery equipment and the base metal industries reported increases of 1.7 percent and 8.2 percent in purchases to NT$13.2 billion and NT$12.8 billion respectively, as firms accelerated investments on capacity expansion and equipment renovation, it said.
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