You are here

Singapore November exports' slide sounds caution on trade

Non-oil domestic exports (NODX) in November slipped 2.6 per cent from a high base a year ago - a surprise drop which underscores the market's cautious outlook for trade in the months ahead.


NON-OIL domestic exports (NODX) in November slipped 2.6 per cent from a high base a year ago - a surprise drop which underscores the market's cautious outlook for trade in the months ahead.

The drop, which came after October's 8.2 per cent jump, was the first year-on-year monthly decline since March 2018, notes OCBC Bank's Treasury Research and Strategy head Selena Ling. "This (drop) is worse than our expectation for 0 per cent and significantly below the market consensus forecast of 1.8 per cent," she says in a brief note to clients on Monday.

Month-on-month, NODX slipped by a seasonally adjusted 4.2 per cent in November, fully cancelling out the 4.2 per cent increase in October, the latest official trade figures released by trade promotion agency Enterprise Singapore show.

Market voices on:

The month-on-month fall came when the market was looking at a 1.1 per cent drop, signalling that the loss in growth momentum was bigger than expected. "The November NODX decline adds to our cautious trade outlook," says Alvin Liew, a senior economist at UOB Bank.

A looming US-China trade war continues to cloud the outlook for trade-dependent Singapore, despite a three-month truce. Uncertainty over the dispute has led to significant declines in NODX shipments to China in recent months. Compounding the situation is a more tepid prospect for growth in the global economy next year, as well as China's economic transition.

Even regional trade appears to be weakening. UOB's Mr Liew indicates that Singapore's non-oil re-exports, a gauge of regional trading sentiments, fell by a seasonally adjusted 5.9 per cent month-on-month to S$22.8 billion in November, down from S$24.2 billion in October.

Ms Ling points out that Enterprise Singapore is projecting a NODX growth of between zero and 2 per cent in 2019, against a growth of 5.5 to 6 per cent in 2018. Though NODX growth is projected to be higher this year, she thinks it's still likely to fall at the low end of the forecast, given the dip in November and "only one month of NODX data remaining for 2018".

Nomura's Euben Paracuelles and Charnon Boonnuch see the NODX growth slipping from 4.3 per cent year-on-year in the first half of 2018 to 2.3 per cent in the second half.

Mr Liew, who expects NODX to fall again in December by 2.6 per cent, is trimming his full-year growth forecast for NODX from 6 to 5 per cent.

Enterprise Singapore blames NODX's year-on-year decline last month on a high base a year ago - when NODX jumped 9.1 per cent - and a drop in non-electronic NODX, which outweighed a rise in electronic NODX.

Domestic shipments of non-electronic goods slipped 5.2 per cent in November, after a 12.7 per cent spurt in October, dragged down largely by a fall in exports of non-monetary gold (-77.9 per cent), specialised machinery (-12.8 per cent) and petrochemicals (-7.8 per cent).

Electronic NODX grew 4.5 per cent last month, after a 3.6 per cent decline in the previous month. The biggest contributors to the increase was a rise in integrated circuits (+27.9 per cent), consumer electronics (+11.5 per cent) and telecommunications equipment (+3.4 per cent). The expansion in domestic shipments of electronic products in November was the first monthly increase since November 2017, but the market was unimpressed. "It still bears watching if the rebound in electronics exports is sustainable into the first quarter of 2019, given the improvement is relatively narrow-based," Ms Ling says.

Mr Liew doesn't think electronic NODX's growth will last, because of the high base effect and the "decelerating global tech cycle".

Except for the US, Thailand, Japan and Taiwan, domestic shipments to the top 10 markets fell in November, with China, South Korea and Indonesia being the biggest contributors to the NODX's decline.

"Exports to China contracted for the seventh consecutive month and even though the decline in November was a smaller -16 per cent (compared to -25.8 per cent in October), its (negative) contribution to the change in NODX levels was still the biggest among the top 10 export destinations," says Mr Liew.

Domestic shipments to the US expanded 33.1 per cent last month, extending the 32.8 per cent growth in October.