August 7, 2017 / 9:18 AM / a year ago

UPDATE 2-Global tech, U.S. demand fuel Taiwan's July exports

* Exports to China +11.7 pct y/y; U.S. +18.7 pct

* Exports expand for the 10th straight month

* Trade surplus with U.S. expands to $990 mln in July vs June

* Cbank expected to leave rate unchanged for Q3, Q4 -analyst (Adds analyst comments in paragraph 11-13, 15)

By Faith Hung and Roger Tung

TAIPEI, Aug 7 (Reuters) - Taiwan’s exports in July expanded for a 10th straight month, as factories rushed to meet orders for Apple Inc’s upcoming iPhone 8 and U.S. shipments surged.

The stronger-than-expected performance bodes well for Taiwan’s economy, setting it up to meet the government’s 2.05 percent target and giving the central bank leeway to leave interest rates unchanged at its quarterly meeting next month.

Exports in July rose 12.5 percent from a year earlier, expanding for the 10th consecutive month, the finance ministry said on Monday. That beat the 8.9 percent forecast in a Reuters poll and was roughly flat against 13 percent growth in June.

July imports also rose a faster 6.5 percent compared with June’s 3.7 percent, resulting in a trade surplus of $5.37 billion.

“The global economy is recovering at a stable pace, orders are coming in from international cell phone brands, while demand for non-electronics products is also picking up, and there was a lower base effect,” the ministry said in a statement, referring to the comparative base of July 2016.

July’s export value was $27.11 billion, the highest since December 2014, the ministry said, adding exports are expected to grow year-on-year in the third and fourth quarters this year.

Apple recently delivered surprisingly strong fiscal third-quarter earnings and signaled that its upcoming 10th-anniversary phone lineup was on schedule, boosting expectations of increasing shipments from its Taiwanese suppliers.

Taiwan is one of Asia’s major exporters, especially of technology goods, and its export trend is an important gauge of global demand for technology gadgets worldwide.

Leading indicators such as the Nikkei/Markit Taiwan Purchasing Managers’ Index have shown Taiwan’s factories picked up the pace in July on robust export demand.

Annual exports in July to China and the United States, Taiwan’s two biggest markets, jumped 11.7 percent and 18.7 percent, respectively. That compared with 21 percent and 7 percent in June.

Some analysts were bullish about prospects in August and September.

“Exports are expected to extend their growth going forward thanks to orders from Apple and better-than-expected commodities prices worldwide,” said analyst Forest Chen of Yuanta Securities Investment Consulting.

He expects Taiwan’s central bank to leave interest rates unchanged for the rest of 2017.

Taiwan posted a trade surplus of $990 million with the United States in July, up from $920 million surplus in June and $628 million in May, the ministry said. Although the gap has widened, it remains below a threshold that could trigger punitive moves by the U.S. Treasury.

“Taiwan’s trade surplus hit $28.2 billion from January to July, up by $420 million in the year-ago period, which indicates the stronger Taiwan dollar is not impacting Taiwan’s exports as much as expected,” Chen said.

Taiwan appeared again alongside China, Japan, South Korea, Switzerland and Germany on the latest watchlist published in April of countries that the United States would monitor as potential currency manipulators. (Additional reporting by Emily Chan; Editing by Jacqueline Wong)

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