November exports miss forecasts

Singapore

SINGAPORE exports recovered in November - but only just - on a weak base a year ago. In fact, non-oil domestic exports (NODX) to some of the Republic's key markets suffered double-digit drops. The anaemic 1.6 per cent recovery, which fell short of market expectations, was also not good news for economic growth in the final quarter.

In November last year, NODX tumbled 9 per cent as pharmaceutical shipments, which tend to be volatile, nearly halved from a year earlier. That low base helped last month's recovery, reversing a 1.5 per cent dip in October. But this was far below the 3.9 per cent expansion which the market was looking for.

International Enterprise Singapore, the government's trade promotion agency which released the latest trade numbers on Wednesday, reported NODX exports fell for all but three of Singapore's top 10 markets. Selena Ling, head economist at OCBC Bank, said that this was a deterioration from October when shipments jumped in seven of the markets. "This suggested the external demand picture has softened into the year end," she said in a brief note.

Shipments to key NODX markets such as the US, EU, China and Japan were back in the red in November, with double-digit NODX shrinkages for the US and EU.

"Singapore is not benefiting from a pick-up in US growth and stronger US import demand," said Chua Hak Bin, Bank of America Merrill Lynch's Asean economist. "Furthermore, sluggish Europe and Japan growth coupled with a slower China is hurting demand."

NODX exports to the US sank 11.0 per cent last month, while shipments to the EU declined 11.8 per cent, according to IE Singapore figures. The electronics NODX, which fell 3.6 per cent in October, was hit especially hard by dismal external demand last month. It sank further by 10.2 per cent, the 28th consecutive monthly slide.

The non-electronic NODX provided a saving grace of sorts, coming back from a 0.5 per cent decline in October to post a 7.5 per cent increase, thanks largely to a 26.8 per cent jump in pharmaceuticals exports.

The plunge in international oil prices is also hurting Singapore's overall export performance, according to Mr Chua. Domestic oil shipments slipped 16.6 per cent in November, the third straight monthly double-digit drop. Oil re-exports tumbled 35 per cent over the August-November period. Altogether, oil exports accounted for nearly a quarter of Singapore's total exports.

Month on month, the NODX did better than expected in November, posting a seasonally-adjusted 2.9 per cent rise, against market projections of 0.3 per cent growth and October's 1.1 per cent increase.

But the spotlight is on the weaker year-on-year performance, which many private-sector economists say will dent the economy's performance in the fourth quarter.

"(The) weak exports reaffirm our expectation of sluggish GDP growth for the fourth quarter," Mr Chua of Bank of America Merrill Lynch said. "Manufacturing stagnated in October and is likely to stay weak in the last two months of the year, as suggested by the latest export readings."

Economist Benjamin Shatil of JP Morgan Chase Bank added: "Details were fairly downbeat in November, suggesting that the positive impulse from external demand on domestic activity will be limited in the fourth quarter. This implies downward risk to our forecast of a bounce in GDP momentum this quarter and could mean full-year 2014 GDP growth of less than 3.0 per cent."

The government has said that the economy expanded 3.3 per cent in the first nine months of the year - and it is tipped to ease to 3.0 per cent growth for the full year.

The latest drop in the NODX brought the year-to-date NODX growth to minus 0.9 per cent for the first 11 months of the year, which is in line with IE Singapore's forecast of minus 1.0 to minus 1.5 per cent. This would mark a decline in two straight years, the first time this has happened since 1981, according to OCBC's Ms Ling.