INSTANT VIEW 4-Taiwan June export order growth slows

TAIPEI, July 20 (Reuters) - Taiwan's export orders rose 22.48 percent in June, within expectations but the slowest pace of year-on-year growth since October amid concerns about the strength of a global economic recovery.

Orders from China, Taiwan's top export market, showed the biggest decline in pace.

The data is a leading indicator of demand for Asian exports and for technology products globally, since the majority of orders are for electronic goods. **************************************************************

KEY POINTS: June Reuters poll May

y/y pct y/y pct y/y pct

Export orders +22.48 +21.9 +34.03

Orders China +15.54 +34.34

Orders U.S. +17.44 +20.32

Orders Europe +25.69 +42.17



Reuters poll range: +19.64 pct to +24.8 pct

To see the orders data in a graphic:

http://graphics.thomsonreuters.com/F/07/TW_EXPORD0710.gif



COMMENTARY:

JOANNA TAN, ECONOMIST, FORECAST LTD, SINGAPORE

'It came in softer from the previous print, basically because of base effects. The low base is receding. On the month, it rebounded modestly from the contraction last month. No doubt the pace for export orders is slowing down with the U.S. book-to-bill ratio easing recently, so the global tech sector can see recovery slowing. And with global recovery showing signs of slowing, that will probably form the backdrop for the exports orders in the coming months.

'I think they will still keep their modest policy normalisation, probably another 12.5 basis point hike in September because they need to get liquidity situation under control.'


SONG SENG WUN, ECONOMIST, CIMB RESEARCH, SINGAPORE

'First, it underpins strong demand for technology sector and other product groups. Demand for electronic exports remains strong. Export growth is likely to be much stronger for many of the export dependent export economies like Korea. Export growth momentum though seems to be slowing down going into the second half of this year. There is some softness because this is seasonally quiet for manufacturing. July numbers may come off a little bit because that's summer holidays.'



REHONG CHUANG, ANALYST, SINOPAC HOLDINGS, TAIPEI

'The value of export orders was a bit better than expectations. June after all is a normal light season, but the value of orders keeps going up. It looks like the orders from mainland China and the United States still aren't too bad. I'd guess that in the peak season of August and September, the value could keep growing to the $35 billion level.'



FANG WEN-YEN, ECONOMIST, KGI SECURITIES, TAIPEI

'This growth rate is according to our expectations. So far, demand from Asia in general fundamentally passes as solid. Other countries are likely to be like Taiwan. Looking ahead, I think year-on-year growth momentum will slow to 15 to 20 percent. For the traditional peak season in the third quarter, overall momentum will be slower as there's uncertainty in Europe and the United States.'



MARKET REACTION:

The Taiwan dollar closed at T$32.155 to the U.S. dollar. The data came after the Taiwan stock market had closed. The TAIEX index closed 0.81 percent higher at 7,712.03.



LINKS:

-- For the full data, see the Taiwan economics ministry's website at http://www.moea.gov.tw.

-- For all Taiwan news and data, 3000 Xtra users can click on ,.



BACKGROUND:

-- Taiwan's orders are an indication of the strength of Asian exports and a bellwether for global tech demand. Taiwan's orders usually lead South Korea's exports by three months.

-- June's rise is the ninth straight after a year of declines.

-- The pace of growth has fallen steadily from January's record due to a flattening out of global demand.

-- In February the government forecast 2010 unadjusted GDP would grow by 4.72 percent. Taiwan's Q1 GDP grew 11.3 percent in the first quarter on a seasonally adjusted, annualised basis.

(Reporting by Taipei and Asian bureaux; editing by Jonathan Standing)
(([e-mail]; [phone]; Reuters Messaging: [e-mail]))
((If you have a query or comment on this story, send an email to [e-mail])) Keywords: TAIWAN ECONOMY/ORDERS



* June orders up 22.48 pct (forecast median +21.9 pct)

* Slowest rate of increase since October 2009

* China order growth drops fastest as tightening bites


(Adds comment)

By Jonathan Standing

TAIPEI, July 20 (Reuters) - Orders for Taiwan's exports recorded the slowest pace of year-on-year growth in eight months in June, as widely expected, adding to growing evidence of a slowdown in demand as the global economic recovery sputters.

The data, a bellwether for other Asian exporting economies such as South Korea and an indicator of global demand, came as China said its strong growth in exports in the first half would give way to slow growth in the second, with Europe's crisis a cloud over demand.

Orders for Taiwan's exports, almost half of which are electronics or communications equipment, rose 22.48 percent in June from a year earlier, the economics ministry said on Tuesday, just above a median forecast of 21.9 percent in a Reuters poll but within the poll's 19.64 percent to 24.8 percent range.

'No doubt the pace for export orders is slowing down with the U.S. book-to-bill ratio easing recently, so the global tech sector can see recovery slowing,' said Joanna Tan, economist at Forecast Ltd in Singapore.

'And with the global recovery showing signs of slowing, that will probably form the backdrop for export orders in the coming months.'

The book-to-bill ratio for North American manufacturers of equipment used to make micro chips has been easing slowly since February and was at 1.12 in May. The ratio is watched as an indicator of the demand pipeline for the industry.

The pace of Taiwan's order growth has fallen steadily since peaking at 71.8 percent in January.

The June figures showed order growth from China falling to 15.54 percent from 34.34 percent in May, an indication that tightening policies on the mainland aimed at cooling its robust growth were having an effect.

'Taiwan's export orders have much higher exposure to China than other Southeast Asian countries,' said Ma Tieying, economist at DBS in Singapore.

'We expect Taiwan to slow down because of China and the uncertainties in the European debt crisis.'

Orders from the U.S. slowed to 17.44 percent growth from May's 20.32 percent and orders from Europe slowed to 25.69 percent growth from May's 42.17 percent.

To see the trend of orders data in a graphic, click:

http://graphics.thomsonreuters.com/F/07/TW_EXPORD0710.gif

A full table of the data can be found at:

http://www.moea.gov.tw/



PROFIT PRESSURES?

Analysts expect weaker demand to hit top Asian technology firms such as South Korea's Samsung Electronics Co and LG Display and Taiwan's AU Optronics, in the second half of the year, in part due to worries over fallout from Europe's debt crisis and high inventories.

Some chip firms are expanding, however, seeing strong demand ahead from corporate PC users for desktop machines, and other analysts noted that export orders remain firm.

'The value of export orders was a bit better than expectations. June after all is a normal light season, but the value of orders keeps going up,' said Rehong Chuang, economist at Sinopac Holdings in Taipei.

'It looks like the orders from mainland China and the United States still aren't too bad.'

Growth rates are also easing as the low base effect which magnified year-on-year comparisons starts to fade. World trade collapsed during the global financial crisis and only began to show some signs of reviving in the middle of last year.

The data is unlikely to alter the outlook for interest rates in Taiwan. The central bank began raising rates last month from a record low 1.25 percent and is expected to bump them up gradually through next year.
(Additional reporting by Roger Tung and Jeanny Kao in Taipei, Jun Ebias in Hong Kong, Nopporn Wong-Anan in Singapore and Karen Lema in Manila)
((Editing by Kim Coghill; Reuters messaging [e-mail]; email [e-mail]; [phone])) Keywords: TAIWAN ECONOMY/ORDERS (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.