Taiwan custom exports likely to register solid growth in November on strong recovery in manufacturing sector

Custom exports in Taiwan are expected to register a solid growth during the month of November, following a strong recovery in the country’s manufacturing sector, with trade in electronics leading the trend.

Custom exports are expected to register a solid growth of 11.3 percent y/y in November, up from 9.4 percent in the prior month. Capital goods imports, which have a high correlation with exports, should have also maintained decent growth last month, DBS reported.

Trade data should confirm that the electronics-driven recovery has been sustained in 4Q. The latest PMI report clearly showed that the manufacturing sector has continued a strong expansion last month. The headline PMI stayed above 50 for the sixth consecutive month and rose further to 54.7 in November from 52.7 in October. New orders, new export sales, production and purchasing activities strengthened across the board.

A further improvement in trade numbers should provide more confidence for the central bank when assessing the short-term growth outlook. But the central bank shouldn’t be in a hurry to raise interest rates. A broader recovery is still needed to pave the way for monetary policy normalization, including a notable improvement in the labor market indicators and a pickup in domestic consumption growth.

"We expect Taiwan’s central bank to stand pat during its quarterly policy review scheduled on 22 December," the report said.