Taiwan’s unemployment rate to improve slightly to 4.32% in September

September 2011 industrial production and unemployment data is out on Monday (24 October). We reckon that industrial output is likely to have risen by 3.8% y/y in September 2011. However, it is expected to have dropped m/m for the second straight month, as local producers – particularly
exporters – are likely to stay cautious due to fear about the widening debt crisis in Europe, as well as amid reports suggesting relatively poor order visibility up to early 2012.

This is likely to continue to weigh on producers’ confidence and bodes ill for the near-term outlook for capital investment as well as for hiring in the manufacturing sector. However, this is likely to be partly mitigated by demand in the tourism and retail trade sectors, credit to rising overseas arrivals and relatively robust consumer confidence. Hence, we think that the unemployment rate will improve, albeit only slightly, to 4.32% in September, from 4.36% in August 2011.