Good Econ News

We're six months from a Presidential election, and the economic news is largely good. First, export orders are booming:

Taiwan's export orders probably rose 16 percent in July from a year earlier, logging their fastest growth since January due to robust demand from China and Europe, a Reuter's poll of 11 economists showed.

Analysts expect healthy growth in those two key markets to sustain growth in orders, a gauge of the strength of exports and global tech demand, in the second half of the year. They also see a limited negative impact of the U.S. Sub prime mortgage market crisis on consumer sentiment in Taiwan's second-largest export market.

These factors will be driving Taiwan's orders in the second half,” said Anita Hsu, an analyst at Masterlink Securities. "The U.S. subprime worries are affecting consumer sentiment, but since the fundamentals of the U.S. economy are sound, we expect the impact on Taiwan's orders to be limited," Hsu said.

If the US can hold off an economic crisis, and China and Europe continue to cruise, we could be seeing some very nice numbers here. According to Bloomberg, we are, with the economy growing at the fastest pace in nearly a year:

Taiwan's economy probably grew at the fastest pace in almost a year in the second quarter as spending by the island's consumers and companies made up for declining exports to the U.S.

Gross domestic product, a measure of all goods and services produced by the island, rose 4.35 percent from a year earlier, according to the median estimate of 17 economists surveyed by Bloomberg News. That would outpace the first quarter's 4.15 percent rate. The report is due at 5 p.m. in Taipei today.

``The bulk of the growth came from domestic factors, from consumer spending to private investment,'' said Alan Liao, a Taipei-based economist of Chinatrust Commercial Bank.

Taiwanese companies including banks and utilities are hiring more workers, boosting household incomes and stoking consumer spending. Faster economic growth may provide room for the island's central bank to raise its benchmark interest rate from 3.125 percent, the second lowest in Asia after Japan's.

Growth in the three months ended June 30 would mark the 16th consecutive quarter of expansion in Taiwan's economy. A rate of 4.35 percent would be the fastest pace since the third quarter of 2006.

Sixteen quarters of growth in a row! The unemployment numbers are also looking good:

Unemployment for the first seven months of the year averaged 3.88 pct, down from 3.89 pct in the year-ago period, it said.

The tally for July was the lowest percentage recorded for the month since 2001, as was the figure for the first seven months of the year.

On a seasonally adjusted basis, the July unemployment rate came in at 3.87 pct, down from 3.90 pct in the previous month and down from 3.88 pct a year earlier, it added.

The DGBAS said 433,000 people were jobless in July, a rise of 10,000 from the month before.

A major contributor to the increase was a rise of 20,000 in the number of first-time job seekers freshly out of school who failed to find work, it said.

Major declines included 8,000 in the number of of those who lost their jobs due to business closures or cutbacks and 1,000 who became unemployed owing to dissatisfaction with their previous jobs.

Observe the key point -- the rise is seasonal, due to graduates hitting the market, and after adjustment, is actually a decline. Further observe that unemployment resulting from layoffs fell. This is good news. If this streak holds for another six months, KMT Presidential candidate Ma Ying-jeou's decision to run on the economy will look like the dumbest one ever. Of course, the economy could tank, and then he'll look like a genius. Meanwhile the one bit of bad news, ominous in an electoral situation where the DPP depends on the working class vote: rising prices and stagnating incomes. Kerim at Keywords has a great post on it.

[Taiwan]