November exports beat forecasts but growth eases

Singapore

SINGAPORE'S exports beat economists' projections in November, but eased from October's sizzling pace as high base effects from a year ago kicked in and electronics growth continued to slow.

Non-oil domestic exports (NODX) rose 9.1 per cent in November year on year, down from the revised 20.5 per cent growth in October, according to the latest data by trade agency IE Singapore. The expansion seen in October was the strongest pace of growth in eight months, due mainly to low base effects, as well as a pickup in the more volatile non-electronics segments.

November's performance, however, still beat economist projections of a 5.5 per cent expansion according to Reuters.

There were two main reasons for this, economists said. The first was because growth in electronics did not slow down as much as expected, said UOB economist Francis Tan.

On top of that, unexpected growth drivers came from non-electronics segments such as non-monetary gold which are harder to predict, added Standard Chartered economist Jonathan Koh.

On a month-on-month seasonally-adjusted basis, NODX rose by 8.7 per cent in November, cooling off slightly from the previous month's 12.3 per cent growth.

In November, exports were supported by both electronics and non-electronics. The main drivers of growth for October and November were similar, said economists.

UOB's Mr Tan said: "Overall NODX was helped by non-electronics over the past two months. And within that, it was due to huge growth in exports of non-monetary gold."

Non-electronics products grew by 10.6 per cent year on year - recording an expansion for the sixth consecutive month, and easing from the 28.1 per cent growth seen in October. In particular, non-monetary gold (43 per cent jump), specialised machinery and primary chemicals contributed the most to growth in non-electronic exports.

Despite the lift given to the NODX, economists caution that some of these segments do not follow a fixed pattern and could not be depended on for future growth.

Standard Chartered's Mr Koh explained: "It's hard to say if segments like pharmaceuticals and non-monetary gold will keep up, because they are more unpredictable, they tend to swing quite a bit."

Meanwhile, electronics shipments expanded at a more muted pace of 5.2 per cent in November compared to a year ago, up from the 4.5 per cent growth in the previous month. Electronics has been a star performer and key driver of the Singapore economy this year.

Economists say the trend of slowing electronics exports has been evident in the past few months and is expected to continue.

Mr Tan said: "Although we remain positive in our outlook on the overall NODX expansion going ahead, driven by semiconductor NODX, we are doubtful on whether the strong double-digit growth exhibited since November 2016 can be sustained as we move into 2018."

This is especially since the current electronics cycle may be coming towards an end with the rollout of the next wave of smartphones, he added.

Mr Koh concurred that electronics exports are likely to continue its expansion, but at a more moderate pace. "This is partly due to high base, but we also think that the inventory buildup cycle in China is also peaking," he said.

Singapore's non-oil re-exports - often seen as a proxy for wholesale trading - rose 3.9 per cent in November compared to a year ago, after a 0.9 per cent decline in the previous month.

Shipments to the majority of Singapore's top markets rose in November, except Hong Kong and Taiwan. Growth was mainly led by China, South Korea and the US.