Singapore non-oil exports up 6% in July

SINGAPORE'S non-oil domestic exports (NODX) continued to rise in July, up 6 per cent year on year and outdoing the 3.6 per cent consensus forecast among economists in a Bloomberg poll, according to data from trade agency Enterprise Singapore on Monday.

This was slower than June's 13.9 per cent expansion, revised down from the earlier 16.1 per cent figure, which had been driven by a low base in the year-ago period.

Still, OCBC chief economist Selena Ling upgraded her full-year NODX growth forecast to 4 per cent, up from a previous 3 per cent prediction, on the back of better-than-expected performance after "circuit-breaker" restrictions.

But Barclays economist Brian Tan noted that the upside surprise was due mainly to surprisingly strong shipments of non-monetary gold.

Both electronics and non-electronics exports grew, though July's gain was driven mainly by the latter. Non-electronic NODX rose 6.9 per cent, easing from 11.7 per cent in June, with non-monetary gold, specialised machinery and pharmaceuticals continuing to be the main contributors to growth.

"Excluding gold, we estimate NODX would have declined by 5.6 per cent year on year in July, following growth of 5.9 per cent in June," said Mr Tan. Non-monetary gold exports had more than tripled in July, with 228 per cent growth year on year.

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Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye noted that non-monetary gold was the largest contributor to non-electronics exports in the second quarter, "and continues to see increasing demand as a safe-haven asset".

While still strong at 15.5 per cent, pharmaceuticals export growth did slow from 30.8 per cent in June. This is in line with Barclays' view "that pharmaceuticals production, which had initially seemed to benefit from the Covid-19 outbreak, is faltering", he said.

Electronic NODX was up 2.8 per cent, easing from the previous month's 22.2 per cent expansion on the back of a low base effect.

NODX to Singapore's top 10 markets rose overall, led by a near-doubling of NODX to the US on the back of rises in non-monetary gold, disk media products and food preparations. But exports to Indonesia, Thailand, Hong Kong, China and the European Union declined.

On a seasonally adjusted, monthly basis, NODX rose 1.2 per cent to S$14.1 billion in July, improving from June's 1.4 per cent decline, as growth in non-electronic domestic exports outweighed a decline in electronics.

Despite the NODX improvement, total trade fell 8.9 per cent year on year in July, deepening from June's 7 per cent fall. Total exports were down 7.9 per cent, after June's 4.3 per cent decrease, while total imports rose 4.8 per cent, similar to the month before.

The Maybank economists remain positive about Singapore's NODX outlook, with resilient demand for electronics - accounting for over a fifth of NODX - and pharmaceuticals, accounting for 10 per cent. "Manufacturing will likely escape recession as exports and regional trade recover," they added.

Wholesale trade and shipping likely hit bottom in Q2 and will gradually improve in Q3 as more economies reopen, while July's improved performance by regional export powerhouses - including China, Vietnam, South Korea and Taiwan - "signals an encouraging start to the third quarter", they said.