November 20, 2012 / 8:35 AM / in 5 years

UPDATE 2-Taiwan Oct export orders beat forecasts as U.S. sales hit record

* Export orders grow 3.2 pct y/y, market had expected 0 pct

* US sales remain strong, China demand slows, EU falls again

* May indicate economy has bottomed but no sharp rebound seen

By Jeanny Kao and Faith Hung

TAIPEI, Nov 20 (Reuters) - Taiwan’s export orders grew by a stronger-than-expected 3.2 percent in October as U.S. retailers stocked up on popular electronic gadgets for the Christmas shopping season, offering more hope that the trade-reliant Asian economy may be slowly stabilising.

The median of forecasts of a Reuters poll of 10 economists showed no growth had been expected in orders last month compared with the same period last year, following a 1.9 percent expansion in September.

Still, analysts said any economic recovery may be sluggish, noting that orders in autumn were traditionally strong before falling off sharply after the year-end holidays, and stressing that the global outlook for 2013 remained subdued.

“The figure was better than expected mainly because of strong orders from the U.S. for Christmas, be they new products from Apple or HTC,” said Forrest Chen, analyst at Ta Chong Bank in Taipei.

“But I have doubts whether the growth momentum will last because we saw sales growth in the U.S. chain stores has slowed in the first half of November. It is for sure that Taiwan’s export orders have bottomed but the strength of the rebound is not strong,” he said.

Buoyed by demand for the latest smartphones and tablet PCs and the launch of Windows 8, orders from the United States rose 9.3 percent on-year to a monthly record of US$97.1 billion, and at a slightly stronger pace than in September, according to figures released by economics affairs ministry on Tuesday

Those from Taiwan’s top customer China rose 1.2 percent, weaker than September’s 4.8 percent.

Orders from Europe continued to fall, declining 2.8 percent, though the rate of decline was not as pronounced as September’s 5.6 percent.

The government said it expected the order value in November to rise from October.

Taiwan’s export orders are a leading indicator of global demand for Asia’s exports and for hi-tech gadgets, and typically lead actual exports by two to three months.


Order growth in September had spurred hopes that the economy was stabilising and set to regain momentum later in the year.

But a drop in shipments by smartphone maker HTC Corp had seemed to flag weaker orders in the fourth quarter. HTC’s shipments make up about 7 percent of Taiwan’s total exports.

Prior to September, orders had declined for six straight months as demand faltered in Europe, the United States and China. Some signs of improvement have been seen in the U.S. and China more recently, but the euro zone has slipped into its second recession since 2009 with no rebound in sight.

Actual exports in October fell 1.9 percent year-on-year, surprising economists who had expected a modest expansion heading into the year-end shopping season.

Taiwanese firms are the main makers of the products of most of the world’s top tech brands, including Apple Inc, Dell, Hewlett-Packard and Nokia. The heavy reliance on electronics exports makes the island’s economy especially vulnerable to swings in external demand.

Adding to the uncertainty, a recent private purchasing managers survey showed new export orders continued to fall in October, though at a slower rate..

The economy of China, the top destination for Taiwan’s exports, grew 7.4 percent in the July-September quarter from a year earlier, its slowest rate of growth in three years.

China’s October data, however, showed some signs that its economy had turned the corner and a recovery was slowly gaining pace.

“As year-end inventory stocking ended around October, fourth quarter and full-year figures will not be too different from this one. But as there are still some new launches in the pipeline, such as Windows 8 products, if they sell well, we may see better growth,” said Andrew Tsai, analyst at KGI Securities.

Taiwan’s government cut its 2012 GDP forecast for the ninth time in just over an year in October to 1.02 percent, due in large part to weak exports.

Other export-reliant Asian economies are also struggling.

Japan’s economy shrank in the third quarter and appears headed for recession as exports tumble and domestic consumption weakens.

But South Korean exports in October rose 1.1 percent from a year earlier, revised data showed this week, the first annual gain in four months, while Philippine exports in September grew 22.8 percent, their fastest rate in nearly two years, driven by a rebound in electronics.

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