October 21, 2019 / 9:34 AM / 2 months ago

UPDATE 1-Taiwan Sept export orders fall for 11th month, rebound seen ahead

* Sept orders -4.9% y/y vs -4.9% in Reuters poll

* Orders from China drop -3.0% y/y; U.S. down 1.8%

* Ministry sees orders rebounding in December

By Yimou Lee

TAIPEI, Oct 21 (Reuters) - Taiwan’s September export orders fell for the 11th successive month but at a slower pace, with weak demand for electronics countering optimism that orders will improve at the year-end.

Monday’s data showed a milder contraction compared with orders in August from many of Taiwan’s main trading partners, including China and the United States.

September orders fell 4.9% from a year earlier to $45.53 billion, data from Taiwan’s Ministry of Economic Affairs showed. That was in line with economists’ expectations for a 4.9% decline in a Reuters poll and better than August’s 8.3% drop.

The ministry said it had seen a rebound in demand for electronic gadgets, including smartphones, ahead of the peak holiday season when vendors are set to launch products.

But the improving outlook for tech goods was offset by weak sales in products such as laptops and servers, the ministry said, adding that a higher base from last year also contributed to the decline.

“Orders are likely to return to growth in December due to a low base last year and good sales from international smartphone vendors,” said Huang Yu-ling, director of the ministry’s statistics agency.

Huang expects orders to drop 4%-6% this year from a record high by volume in 2018.

The ministry sees October export orders declining 3.0%-5.1% from a year earlier, adding that telecommunications and electronics orders were expected to grow in the fourth quarters due to the peak season.

It said rising demand for new technologies, including fifth-generation telecommunications (5G) technology and artificial intelligence, will also help boost orders in the coming months.

Taiwan’s hi-tech factories are major suppliers for global tech giants such as Apple Inc and Qualcomm, and the continued drop in orders suggests global electronics could remain soft for some time.

Bucking a trend of economic growth downgrades in the region, Taiwan’s government in August raised its 2019 forecast, citing gains from factory relocations. Taiwan companies were moving production home to avoid higher tariffs on Chinese goods amid the prolonged trade war between the United States and China.

“Global demand was weak and regional supply chain was disrupted,” said DBS economist Ma Tieying. “But Taiwan was boosted by returning investment and production, thus exports were relatively better.”

September orders from the United States slipped 1.8% from a year earlier, compared with August’s 7.8% decline.

Orders from China dropped 3.0% versus an 8.9% tumble the previous month. Orders from European buyers dropped 8.6% while those from Japan fell 4.2%. (Additional reporting by Liang-sa Loh and Jeanny Kao; Editing by Jacqueline Wong)

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