Here's why Taiwan's short-term economic turmoil is getting better

Export orders hit a remarkable climb of 3.8%.

According to DBS, more data are showing that the short-term economic cycle is bottoming out. Export orders registered a noticeable rise of 3.8% (MoM sa) in September, although underperformed the 5.0% growth in custom exports during thesame month.

Here's more from DBS:

The orders data are less affected by seasonal and working day effects compared to the shipment data. Hence, the improvement in September export orders raised the expectations that the external demand conditions are indeed turning better.

The rebound in export orders was largely driven by demand from China. Orders from China and Hong Kong jumped 5.2% (MoM sa) in September on top of the 3.2% gains in August.

Product wise, the strongest growth was seen in demand on precision instruments including LCD/LED flat panels (8.5%).

The latest data also revealed that China’s overall imports of mechanical and electrical products rose strongly in September (4.3% MoM sa).

This indicates that the recent increase in China’s high-tech imports from Taiwan was probably due to a genuine improvement in China’s fundamental demand, rather than solely because Chinese firms switched orders from Japan to Taiwan.

External demand is the key driver for manufacturing output and GDP growth in Taiwan. Industrial production for September (due today) is projected to rebound to 5% YoY, up from 1.9% in the previous month.