Taiwan May export order slump deepens gloom for tech demand

[TAIPEI] Taiwan's export orders in May fell at their fastest pace in more than two years, darkening the outlook for global technology demand that will likely hurt the island's technology exports.

The worse-than-expected 5.9 per cent annual decline in May came against expectations for a 0.65 per cent fall in a Reuters poll and widened from a 4 per cent slide in April. May's drop was the worst since March 2013.

The weak data is unlikely to change economists' views that the central bank will probably stand pat on interest rates when it meets to review policy on Thursday.

Taiwan is seen in no hurry to lift rates even if the US Federal Reserves raises interest rates given uncertainties in Europe from Greece's debt woes and China's slowdown that continues to muddy the outlook for the island's export-related demand. "This slide was too pronounced. Nothing has been that bad in the world," said Tim Condon, economist with ING in Singapore. Condon said oil prices like continued to play a role in depressing the value of export orders.

May's US$35.8 billion in export orders marked the second month-on-month decline in overall orders.

While the ministry said the value of June orders should increase from May levels, ministry official Lin Li-jen told reporters: "We aren't seeing a huge spike in demand." Taiwan's orders are seen as a leading indicator of demand for Asia's exports and for hi-tech gadgets.

Asia is struggling to overhaul an economic model based on exports and is confronting a patchy global recovery.

Earlier on Tuesday, China's factory activity contracted for the fourth straight month in June while Japanese manufacturing activity also contracted slightly in June as new orders fell.

It is tough to see much into the second half, said Adam Lin, chief executive officer at Largan Precision Co Ltd, a leading Taiwanese lens manufacturer whose goods are found in cameras fitted in mobile devices.

Mr Lin, who spoke at a news conference earlier this month, said that business for the month of June for his company should be about the same as May, though it should pick up in July.

Orders from China in May fell 11.6 per cent, worse than the 10.3 per cent decline in April, while US orders rose 5.2 per cent, down from 14 per cent growth in April.

Europe orders fell 1.7 per cent in May and Japanese orders dropped 23.8 per cent.

Some economists estimated Taiwan's export orders may see an annual decline for the full year compared with the bumper 2014 due to the launch of new iPhone models last year.

REUTERS