TAIPEI: Taiwan's export orders fell for an 11th month in August, as weaker demand from the US and Europe offset improved sales to the mainland.

Export orders, an indicator of actual shipments over the next one to three months, dropped 11.96 percent from a year earlier, after an 8.77 percent decrease in July, the "Ministry of Economic Affairs" said in Taipei yesterday. That's more than the median estimate of a 7.25 percent decline in a Bloomberg News survey of 12 economists.

Taiwan is relying on exports, which account for more than two-thirds of the economy, to drive the island's recovery. Increased demand from the mainland for electronic products from companies including Taiwan Semiconductor Manufacturing Co and Asustek Computer Inc were countered by a larger decline in sales to the US and Europe.

"The weaker-than-expected export orders is no cause for worry," Cheng Cheng-mount, an economist at Citigroup Inc, said by telephone in Taipei yesterday. "There were fewer working days in August because of the typhoon. In September, we will see a smaller decline in export orders as the economy recovers. By October, we can see a growth in export orders."

Typhoon Morakot dumped record rainfall on Taiwan between August 6 and 9, killing more than 600 people as landslides buried villages and destroyed bridges and roads.

Industrial production fell 9.62 percent from a year earlier, after declining a revised 7.93 percent in July, according to yesterday's report.

The value of export orders declined to $28.29 billion last month, compared with $28.61 billion in July, the report showed. Export orders from the mainland and Hong Kong combined increased 7.27 percent, compared with a gain of 2.22 percent in July.

Orders from the US, Taiwan's second-largest market, fell 19.27 percent from a year earlier, compared with a 12.51 percent decline in July. Orders from Europe, the island's third-largest market, fell 21.56 percent, compared with 14.56 percent in July.

Taiwan Semiconductor, the world's largest custom-chip maker, in July forecast third-quarter profit and sales that beat analysts' estimates as demand recovered. The company is a bellwether for the electronics industry because it makes chips for products ranging from mobile phones to games consoles.

Asustek Computer, owner of the world's biggest computer main board maker, last month said shipments of computer notebooks are likely to rise to about 1.8 million units this quarter from 1.2 million in the second quarter.

Orders for electronics goods fell 12.2 percent last month, compared with a drop of 7.97 percent in July, the report showed. Demand for information technology and communications products fell 9.07 percent in August, after declining 3.64 percent the previous month.

Taiwan's central bank will probably keep interest rates unchanged after a quarterly board meeting today as the "economic recovery is still fragile and given the lack of severe upside risk of inflation", said Tony Phoo, an economist at Standard Chartered Bank Plc based in Taipei.

Central bank governor Perng Fai-nan left borrowing costs unchanged in June, following seven cuts starting in September that reduced the benchmark rate to a record 1.25 percent.

The figures were released after the close of trading on the stock exchange.

Bloomberg News

(HK Edition 09/24/2009 page2)