Taiwan June exports surge, fuelling hope for robust H2 gadget demand

[TAIPEI] Taiwan's exports in June surged more than expected, underpinned by robust shipments into China, as the tech supply chain for gadgets that make up smartphones and ultra-thin laptops enters its seasonally-busy second half.

June exports rose 13 per cent from a year ago, increasing for a ninth straight month and beating the 8.7 per cent forecast in a Reuters poll.

Imports rose a smaller 3.7 per cent for the same time period, easing back after solid gains in recent months, finance ministry data showed.

"The peak in imports is slowly passing, but exports' growth is just starting," said Aidan Wang, an analyst at Cathay Securities Investment Trust in Taipei.

Although a high base from last year's second half may result in "ordinary" gains in the months ahead, "the export momentum is still quite strong," he said.

Taiwan is one of Asia's major exporters, especially of technology goods, and its export trend is an important gauge of global demand for technology gadgets worldwide.

Last month's jump was boosted by a 21 per cent on-year advance in shipments to China, the island's largest export destination and where many Taiwanese tech firms have production plants. In May, exports to China rose only 6.4 per cent.

Shipments were led by double-digit gains in electronic components, up 19.5 per cent in June from a year ago, and parts related to information, communication and visual gadgets - category for smartphones - up 17.2 per cent.

For 2017's first half, exports grew 12.5 per cent from a year earlier. The government has forecast shipments for the full year will rise 8.57 per cent compared with 2016, when they contracted 1.8 per cent.

Hopes for a strong second half stem from anticipation of a new, 10th anniversary iPhone by Apple Inc and other product launches that should fuel year-end holiday demand.

A private barometer of Taiwan's manufacturing activity in June indicated bright prospects with a sharp rise in new export orders, a leading indicator of shipments in the following two-three months.

Taiwan's trade with the United States in June produced a surplus of US$920 million, wider than May's US$628 million, ministry data showed. The trade gap remains below one of the thresholds that could trigger punitive moves by the US Treasury.

Taiwan, as part of a public comment process on its trade with the United States, said in May that arms sales narrow the bilateral trade gap. In June, President Donald Trump's administration notified Congress of US$1.42 billion in arms sales to Taiwan.

Beatrice Tsai, a Taiwan finance ministry official, told reporters that arms sales have in the past been included in the trade figures and would contribute to a narrower trade gap.

REUTERS