Singapore’s trade sector began the year on a whimper with non-oil domestic exports (Nodx) for last month sliding by a worse-than-expected 10.1 per cent from a year ago.
ST FILE PHOTOFeb 19, 2019, 5:00 am SGTMoreLinkedinPinRedditPrintPurchase ArticlePermalink:http://str.sg/oE6qCopyDrop is biggest since Oct 2016, with both electronic and non-electronic shipments falling Singapore’s trade sector began the year on a whimper with non-oil domestic exports (Nodx) for last month sliding by a worse-than-expected 10.1 per cent from a year ago.This is the biggest contraction since exports slumped 12 per cent in October 2016.
Analysts polled by Bloomberg were expecting a decline, but of 3.5 per cent, given the high base effect of January last year, when exports rose 13 per cent.
The drop last month was also the third straight month of decline after an 8.5 per cent fall in December and 2.8 per cent decrease in November, Enterprise Singapore figures released yesterday showed.Ms Selena Ling, OCBC Bank’s head of treasury research and strategy, said the magnitude of the decline shows 2019 is starting on a “soft footing for trade”.Both electronic and non-electronic shipments shrank.Exports of electronic products were down 15.9 per cent year on year last month, after an 11.2 per cent fall in the previous month.The decline was led by personal computers (-34.3 per cent), disk media products(-29.2 per cent), and integrated circuits (-6.8 per cent).Shipments of non-electronic products fell 7.9 per cent, after falling 7.4 per cent in December. This was due mostly to declines in exports of specialised machinery (-32.8 per cent), pharmaceuticals (-11.8 per cent), and non-electric engines and motors (-40.9 per cent).SOMETHING TO BEAR IN MINDBefore turning overly bearish, it may be worth considering the possibility that purchasing managers may have cut back on their orders too drastically when the trade war was at its worst.DBS ECONOMIST IRVIN SEAHMr Robert Carnell, ING’s chief economist and head of research, Asia-Pacific, said: “Although it looks bad, and there is a temptation to draw a very negative conclusion from today’s figures, there is a chance that we are seeing the seasonal low for electronics.”These have a tendency to trough in February.
A slight shifting in the seasonal norms for electronics might have brought forward the low point this year to January, and means we could see a bounce in February.”But he added: “That said, any such seasonal bounce might prove very short-lived, and the negative petrochemical result is very worrying.
This points to a broad weakness in external demand, with these products ubiquitous in almost all production and packaging.”Exports to all of Singapore’s top 10 markets declined last month, led by China (-25.4 per cent), South Korea (-31.4 per cent) and Hong Kong (-11.7 per cent).”Understandably, North Asian markets were likely most impacted by the US-China trade tensions, but other regional Nodx markets were also soft in January,” Ms Ling noted.
The fall in shipments to China, Singapore’s single largest market – after the previous month’s 15.4 per cent expansion – was led by non-monetary gold (-94.9 per cent), specialised machinery (-55.2 per cent) and measuring instruments (-40.9 per cent). Exports to the United States reversed course to fall by 4.6 per cent last month, after rising 31.1 per cent in December.Nonetheless, DBS economist Irvin Seah said: “Before turning overly bearish, it may be worth considering the possibility that purchasing managers may have cut back on their orders too drastically when the trade war was at its worst.”On a month-on-month seasonally adjusted basis, Nodx was down 5.7 per cent last month, following December’s 4 per cent decline, due also to falls in both electronic and non-electronic Nodx.For last year, figures released last Friday showed that Nodx growth slowed sharply to 4.2 per cent from 8.8 per cent in 2017, with exports dipping 1.1 per cent in the final quarter of 2018.Enterprise Singapore has maintained its growth forecasts for Nodx at 0 to 2 per cent for this year.