Taiwan’s export orders surprisingly rebounded in July after five straight months of contraction bolstered by demand in China and the United States, pointing to stronger retail demand for Asian exporters in the third quarter.
Trade-reliant Asian economies are looking to encouraging trends in the United States and the euro zone to counter slowing growth in China, the region’s largest market.
Taiwan has cut its growth outlook for 2013 due to tougher export conditions as factories supply less to China although there is some optimism that global retail demand will pick up at the year-end.
Taiwan’s export orders in July rose 0.5 percent from a year earlier, rebounding from a contraction of 3.5 percent in June. Orders in July rose 0.4 percent month on month, data from the Ministry of Economic Affairs showed.
The government said the better-than-expected data showed demand had started to gather steam, and some tech exporters agreed the outlook was improving.
“The supply of display panels with high specifications, mostly used in tablets and smartphones, was tight in July but it’s improving this month and it’s expected to get even better in September,” said Jay Huang, Wintek’s chief financial officer. Wintek supplies touch panel to Apple .
“From what we’re seeing the orders in Q3 are very good. We have many new orders from new clients for the product launch,” he said. “It’s too early to tell about Q4 and Q1.”
Eleven economists in a Reuters poll estimated that July export orders would fall 1.46 percent from a year earlier. Orders shrank 3.5 percent in June.
Orders from Taiwan’s two biggest markets were both up, with mainland China growing 2 percent and the United States 2.8 percent. Those from Europe and Japan contracted 1.2 percent and 10.7 percent, respectively.
“I think the global economy is close to a bottom. It’s a consensus that the global economy is on the road to recovery, but it’s questionable how strong the momentum is,” said Andrew Tsai, an analyst of KGI Securities in Taipei.
Taiwan’s export orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets, and typically lead actual exports by two to three months. Electronics and components makers are looking to improving consumer spending to lift earnings.
U.S. manufacturing grew in July at its fastest pace in two years while European factories snapped a two-year run of declining output, suggesting a prolonged recession in the euro zone may be nearing an end. China’s manufacturing sector has also been showing modest growth.
But momentum is patchy for some exporters. Manufacturing surveys showed output and new orders falling in July for Taiwan and South Korea. (Reuters)