Taiwan's industrial production index fell 15.73 percent on the year in May, a shallower contraction than the drop of 22.60 percent recorded in April. Output in the manufacturing sector also fell at a less steep pace in May, down 16.42 percent on the year after a previous fall of 23.25 percent, compared with PMI survey data which showed, on a monthly basis, an easing pace, not a more severe pace, of contraction in May. Elsewhere in the industrial sector, output fell in the electricity and gas supply industry as well as the water supply industry but rose in the mining and quarrying industry.

The industrial production index measures changes in the volume of industrial production with respect to the base year. The index charts the growth in production of each major industry and of the manufacturing sector. Industrial Production measures the physical output of the nation's factories, mines, and utilities. Factories manufacture various products, and the industrial production indexes have been prepared as a comprehensive indicator of wide-ranging production activities for such products and are regarded as some of the most important among economic indexes.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

Industrial production provides key industry data for export-dependent economies. It is highly sensitive to the business cycle and can often predict future changes in employment, earnings and income. For these reasons industrial production is considered a reliable leading indicator that conveys information about the overall health of the economy. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Detailed data in the report shows which sectors of the economy are growing and which are not.