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UPDATE 2-Taiwan's July export orders fall again, but China demand picks up
August 22, 2016 / 9:06 AM / a year ago

UPDATE 2-Taiwan's July export orders fall again, but China demand picks up

* July export orders -3.4 pct y/y vs Reuters poll -1.14 pct

* Govt expects August export order value to be higher than July

* New product launches to support orders for tech goods

* expected to cut interest rate again in H2 (Adds analyst comments, details)

By Faith Hung and Liang-Sa Loh

TAIPEI, Aug 22 (Reuters) - Taiwan’s export orders in July contracted for the 16th straight month as global demand for technology products stayed weak, but Chinese orders grew in a sign of recovering factory activity.

The island’s tech manufacturers have cut their sales forecasts amid weak global growth and a China slowdown, but have been cautiously optimistic that demand for consumer electronics would pick up ahead of the year-end festive season and the anticipated launch of Apple’s new model iPhone.

July’s figures show that orders for the expected rollout of the iPhone 7 were not as strong as hoped for.

“Order for components used in the new iPhone model missed expectations...we would be able to get a clearer picture about its overall demand in September,” said Forest Chen, an economist at Yuanta Investment Consulting Co.

Export orders in July fell 3.4 percent from a year earlier, the Ministry of Economic Affairs said on Monday, worse than a median 1.14 percent slide in a Reuters poll and a 2.4 percent fall in June.

The decrease in July orders was due to an across-the-board decline in products, led by precision equipment, machinery and chemicals, the ministry said in a statement.

Taiwan’s orders offer an indication of exports two to three months ahead and is a gauge of global technology demand.

The government raised the island’s 2016 economic growth outlook last week, after three cuts in a row, hoping demand from China and its other major markets would pick up ahead of the year-end festive season.

China’s orders in July grew 0.7 percent from a year earlier, its first gain since January 2015, the ministry said.

Orders from the United States fell 1.6 percent and Europe - comprising around a fifth of total orders - dipped 3.8 percent. Japan orders slumped 19.7 percent.

Orders for information and communication goods in July fell 3.3 percent, while those for electronics goods fell 1.8 percent.

“Looking forward, new product launches by global brands...would boost orders for semiconductor supply chain and informational and telecommunications products, and strong flat panel demand and traditional goods would help export orders get better,” the ministry added.

“However, the momentum of information and telecommunications product sales, global economic growth and global oil prices will all affect export orders going forward,” it said.

With exports and orders struggling to gain traction, some economists expect Taiwan’s central bank to cut interest rates again this year.

The central bank cut interest rates for the fourth consecutive meeting in June, saying fiscal stimulus and economic restructuring were also needed to revive the economy. (Editing by Jacqueline Wong)

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