Monday, January 20, 2014

Taiwan Export Orders, Manufacturing Recover

We expect Taiwan’s export orders due Monday to rise to 2.2% on-year from 0.8% the preceding month, and industrial output numbers out on Thursday to pick up to 3.3% from a 0.1% fall.
Export orders growth has risen notably for four straight months on a monthly basis and production growth has also turned up in November. The two purchasing managers’ index (PMI) surveys for December showed that orders and production increased at the fastest rate over many months.

Another positive sign is that capital goods imports made a decisive turnaround in December, surging to a two-and-a-half-year high of US$4.1 billion (24.7% on-year). This indicates the confidence improvement in the business sector and the planned increase in capital expenditures for 2014.

Admittedly, the actual export shipments remained sluggish as of December, falling 1.9% on-year. With the orders and output growth both picking up, export growth (a lagging indicator) is expected to catch up sooner or later. A broader and more notable improvement in economic data in the coming months is expected to support investor sentiment on the Taiwan Stock Exchange and the Taiwan dollar.