TAIPEI–Taiwan’s export orders in July are expected to grow from the same period of last year, stopping a five month year-on-year downward streak, as the global economy shows signs of recovery, analysts said Saturday.
Gordon Sun, director of the macroeconomic forecasting center under the Taiwan Institute of Economic Research, said manufacturing activity in the U.S. and Europe is improving, indicating demand from the two regions is on the rise.
According to the U.S. Institute for Supply Management, the purchasing managers’ index (PMI) of the U.S. for July rose to 55.4 from 50.9 recorded in June. The July level beat a market estimate of 52. In Europe, the Markit Eurozone PMI rose to 50.5 in July from June’s 48.3. A reading of more than 50 in the PMI means an expansion in manufacturing activity.
The U.S. and Europe are two of Taiwan’s major buyers and recovery of their demand is expected to boost outbound sales by Taiwanese exporters.
In June, the U.S. and Europe placed the second- and third-largest export orders to Taiwan, accounting for 25.2 percent and 17 percent, respectively, of the total export orders, following China and Hong Kong, with a share of 25.4 percent.
Last month, Taiwan’s export orders unexpectedly fell 3.5 percent from a year earlier to NT$35.1 billion after a year-on-year decline of 0.4 percent in May, a 1.1 percent drop in April, a 6.6 percent decrease in March and a 14.5 percent plunge in February.
Sun said that in addition to rising demand from the U.S. and Europe, the traditional peak season effects seen in the second half of the year are expected to boost Taiwan’s exports, adding that it is very likely for Taiwan in July to reverse the declines seen in the past five months.
The Ministry of Economic Affairs (MOEA) said that riding the wave of the peak season, international handheld device vendors are planning to unveil new models in the second half of the year, which could help local suppliers raise their shipments. The MOEA said a hike in international crude oil prices and an increase in petrochemical production could also boost sales of locally made plastic and chemical products.
However, Sun said that HTC Corp., the leading Taiwanese smartphone brand, reported lower-than-expected sales for July, which could have an impact on Taiwan’s total export orders for the month.
HTC’s consolidated sales for July fell 29 percent from a month earlier to NT$15.7 billion (US$523 million) on inventory adjustments.
A survey released by the MOEA showed that 20.1 percent of Taiwanese exporters polled said they expect their orders for July to rise from June, while 23 percent of them said their orders will show a decline.
The survey said about 57 percent of the respondents thought their orders for July will stay little changed from a month earlier.