Chart of the Day: Semiconductor demand drives manufacturing output in Q1

But pick up in manufacturing output is not broad-based.

This chart from Standard Chartered shows that manufacturing sector is driven primarily by
semiconductor demand.

Industrial production increased 8.0% YoY in 1Q17 versus a contraction of 0.4% last year, suggesting a significant recovery if only the superficial headline print is considered.

"However, the pick-up in activity is uneven within the industry clusters. Electronics was the main driver of IP, as output rose 33.1% YoY in 1Q17. Precision engineering output rose 19.4% YoY in the same period, bolstered by demand for electronics manufacturing," StanChart said.

"The limited pick-up in activity is more of a concern, as demand is not broad-based even within the electronics sector. Semiconductor output rose 50.3% YoY in 1Q17, while other areas of electronics manufacturing saw only modest increases or even declines in production," it added.

The performance of other industry clusters remained lacklustre; chemicals production registered only modest growth, while biomedical manufacturing, transport engineering and general manufacturing contracted in 1Q17.