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Quick Takes: Economists surprised by May's NODX decline
SINGAPORE'S non-oil domestic exports (NODX) disappointed in May, dragged down again by the electronics sector. Overall, the 0.2 per cent year-on-year fall was far under the market's expectation of a rosier 2.3 per cent increase.
Here's what private-sector economists had to say about the data, which were released by IE Singapore on Wednesday morning:
Barclays economists Leong Wai Ho and Bill Diviney: "The details showed continued surprise strength in the rig-building sector and volatile pharma shipments did not weaken as much as expected, which partly offset a bigger drag from petrochemicals and ongoing weakness in electronics. The data continue to suggest that sectors beyond electronics - rig-building, pharmaceuticals, aerospace and engineering - are becoming increasingly bigger drivers of NODX, gradually taking over the role of the electronics sector. That said, we continue to expect a cyclical recovery in electronics shipments over the coming months, supported by continued strength in the US and a recovering Europe."
UOB economist Francis Tan: "We still maintain our 2015 NODX forecast of a one per cent contraction, as we continue to see a slowdown in PC-related electronics exports as well as the trend where manufacturers shift focus to the export of services rather than merchandise (thus impacting NODX as it tracks the exports of goods and not services). We also expect the exports of petrochemicals to come under pressure as the current oil price weakness (on a year-on-year basis) will persist at least until the end of 2015."
JP Morgan economist Benjamin Shatil: "In contrast to the Monetary Authority of Singapore (MAS), which appeared more upbeat in assessing global demand conditions in its April policy statement, we have been sceptical of a near-term export-led lift. Singapore's manufacturing and export sectors appear to be responding at a lower beta to overall global demand, possibly reflecting the impact of domestic supply-side constraints on the labour market, as well as structural shifts in the composition of exports. This may be dampening the impact on exports of FX-led policy easing. We are forecasting flat GDP growth in Q2."