NON-OIL domestic exports surprisingly jumped 11.6 per cent from a year ago in May - when the market had expected a 1.6 per cent drop. A bigger surprise is domestic gold shipments were a key contributor to last month's spike in NODX, which came after a 7.9 per cent tumble in April.
"Non-monetary gold exports," said OCBC Bank's Selena Ling, "are not typically the first things that pop to mind as the traditional key exports of the Singapore economy." Yet, exports of non-monetary gold, which refers to shipments of all gold not held as reserve assets by the authorities, were singled out along with pre-fabricated buildings and pharmaceucticals by International Enterprise Singapore as the main drivers of the NODX's rise last month.
Releasing the latest trade numbers in a report on Friday, the trade promotion agency said that domestic gold shipments, which together with pre-fabricated buildings and pharmaceuticals are part of non-electronics NODX, surged 436.7 per cent in May.
The volatile pharmaceutical exports increased 5.6 per cent. IE Singapore didn't provide the increase for pre-fabricated buildings.
Total non-electronics NODX, which makes up about 70 per cent of NODX, rose 19 per cent last month, against an 8.1 per cent drop in April. Electronics NODX continued to slip for a third straight month, by 6 per cent after declines of 7.4 per cent in April and 9.1 per cent in March.
United Overseas Bank's Alvin Liew said in a report: "Even though the domestic consumption of gold is very small, Singapore is a big regional player in the gold trade. And gold was a clear beneficiary of the uncertain environment in the first half of 2016."
Gold prices have risen some 20.6 per cent from the start of the year, one of the best performing assets so far in 2016. "The high gold price could have led to gold dishoarding," said Mr Liew, "incentivising sellers to come out to take advantage of the surge in gold prices while gold demand was also likely to be robust in May ahead of a key geo-political risk event - the Brexit vote on June 23."
Added Nomura's Euben Paracuelles and Brian Tan in a report: "In level terms, we noted Singapore's domestic exports of non-monetary gold have picked up since the start of the year, which may be partly in response to higher gold prices." Both they and Mr Liew estimated that domestic gold shipments accounted for another 2.5 percentage points of NODX's growth in May. An IE Singapore official told BT that Singapore's top three markets for non-monetary gold in May were Switzerland, Malaysia and China. In May 2015, they were Switzerland, Malaysia and Hong Kong.
Domestic exports of pre-fabricated buildings were a bigger contributor, according to the UOB and Nomura economists. These shipments added 13.6 percentage points to last month's NODX gains. Nearly all of the pre-fabricated building exports went to Norway. But the economists see the shipments to Norway falling back to "normal" levels in the months ahead.
Month on month, NODX also did better than expected last month, climbing by a seasonally adjusted 16.8 per cent - eight times more than what private-sector economists had projected and four times more than April's increase.
Though both the year-on-year and sequential spurts were the strongest NODX reading since March 2015, the boost in May may only be a blip - and could quickly reverse, many economists believe.
OCBC's Ms Ling said that NODX's outperformance last month came from a low base and UOB's Mr Liew indicated that it rested only on a few narrow segments, in particular gold. Even if gold shipments continue to be strong in June, the latter said, the outlook for the major segments of NODX - electronics, chemicals and petrochemicals - still doesn't look good.
Global markets also remain weak. The US, Taiwan and Malaysia were the biggest contributors to NODX's ascent last month. NODX shipments to six of Singapore's top 10 markets were still down.
According to Citigroup's Kit Wei Zheng, non-oil retained imports of intermediate goods fell from January-March to April-May and this "may suggest that manufacturers are not particularly optimistic about the outlook for final demand and may be reluctant to stock up on components".
The continuing descent in non-oil re-exports - slipping 2.8 per cent year on year in May and 3 per cent in April - indicated "that trade-related services may be under some pressure", he added.
IE Singapore had at the start of the year expected NODX's growth to be flat or up to 2 per cent in 2016, but last month it revised its forecast. Now, the trade promotion agency tipped NODX to tumble by 3-5 per cent this year.