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Export orders cool, output falls

Taiwan's export orders rose in July at the slowest pace in two years and industrial production unexpectedly fell as the island's steelmakers received fewer orders and quotas curbed textile sales to the US

Export orders -- indicative of shipments in one to three months -- rose 8.71 percent from a year earlier to US$20.15 billion after climbing 16.7 percent in June, the Ministry of Economic Affairs said in a statement released yesterday.

Industrial production fell 1.1 percent. Output was expected to have gained 1.1 percent, according to a Bloomberg survey of six economists.

The government is having to rely on domestic demand to create jobs and drive growth in Taiwan's US$305 billion economy as investment curbs in China and high oil prices cool demand for the island's products. Industrial production should rise this month, said Chang Yaw-tzong (張耀宗), statistics chief at the ministry.

"Demand from the US is weakening, especially for textile products, because of quotas on some clothing items," Chang said at a press briefing today. "Some overseas clients have delayed their orders for metals in the expectation that steel prices will slide." Overseas orders for Taiwan's textiles fell 6.66 percent to US$1.12 billion last month after climbing 1.4 percent in June, the statement said. Orders for metal products -- the island's third-biggest seller in overseas markets -- declined 1.51 percent to US$1.69 billion after climbing 3.9 percent in June.

Export orders for plastics also slumped, climbing 10.25 percent to US$1.18 billion after gaining 31 percent in June, as one of the island's biggest refineries was closed for maintenance. Chinese Petroleum Corp (中油), Taiwan's state-owned oil refiner, shut one of its three naphtha crackers after a fire broke out on July 1.

Sales of Taiwan's electronic goods, including chips, rose 21.24 percent to US$4.76 billion in July after climbing 18 percent the previous month, the statement showed. Orders for information technology and communications equipment increased 21.07 percent to US$3.86 billion.

Adjusting for distortions caused by changes in the timing of the Lunar New Year holiday, July's increase in overall export orders was the smallest since May 2003. Figures for January and February are combined as the weeklong break can fall in either month.

The increase in orders was also less than the median 13.7 percent gain forecast in the Bloomberg survey.

Orders from the US, the world's biggest economy, rose 3.12 percent to US$5.52 billion in July following 6 percent growth in June, today's statement showed. Sales to Japan increased 16.79 percent to US$2.24 billion in July, after increasing 32 percent the previous month, and those to Hong Kong climbed 11.59 percent to US$4.8 billion following 20 percent growth in June, the report said.

Most Taiwan-made goods bound for China, the biggest buyer of the island's exports, are shipped via Hong Kong because of transport restrictions between Taiwan and the mainland, the island's political foe.

Export orders from Europe rose 11.9 percent to $3.07 billion after climbing 13 percent in June, today's statement said.
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