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Singapore's NODX up a surprise 11.5% in November

Sharp jump contrasts with expections of a fall; while full-year figures still show decline, analysts say this bodes well for 2017

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Non-oil domestic exports surprised the market with not just a recovery, but a sharp rebound, in November.


NON-OIL domestic exports surprised the market with not just a recovery, but a sharp rebound, in November. The NODX pulled back from a 12.0 per cent plunge in October to post an 11.5 per cent jump.

Month on month, the NODX recorded a sharp seasonally adjusted 13.1 per cent increase, after tumbling 3.6 per cent in the previous month, according to the latest official trade data released on Friday by International Enterprise (IE) Singapore.

Except Japan, Thailand and Indonesia, the trade promotion agency said NODX shipments to all the top 10 markets rose in November. The EU (up 48.3 per cent year-on-year), Hong Kong (+38.1 per cent) and China (+15.8 per cent) were the three biggest contributors to the NODX's rise last month.

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The market was looking to a 2.7 per cent year-on-year and 1.5 per cent month-on-month drop in the NODX in November. While the unexpectedly steep jump is not enough to stop the full-year NODX from slipping for a fourth straight year, UOB Bank economist Francis Tan said it bodes well for a stronger NODX growth in 2017.

The NODX's trend growth, while still in shrinking mode currently, has been improving since it hit a "minimum turning point" in April 2015, according to Mr Tan.

"We maintain our 2016 NODX growth forecast of -4.1 per cent, marking the fourth year of full-year NODX decline," he said. "Nevertheless, we forecast 2017 NODX to finally break the contractionary barrier and grow 0.7 per cent - although it is still a very weak growth."

The NODX, which fell 5.4 per cent in the third quarter and 4.5 per cent in the first two quarters, will drop 5.0 to 5.5 per cent in 2016, according to IE Singapore's latest forecast. It dipped 0.1 per cent last year and 1.5 per cent in 2014. In 2013, the NODX fell 6.0 per cent. IE Singapore has already indicated that the NODX is likely to do better next year. Last month, it projected the NODX's growth to fall between minus one and plus one per cent in 2017, citing "improvements in the growth outlook for advanced and developing economies like the US, NIEs and Asean".

Citigroup's Kit Wei Zheng said the NODX's strong showing last month suggests that risks of a fourth-quarter technical recession may have receded. But he remains cautious of NODX's growth, "given that the rebound (in November) was largely driven by volatile pharmaceuticals".

"Trump presidency-related" uncertainties remain, with Singapore relatively more exposed to any protectionist policies compared to the rest of Asean, Mr Kit said.

Pharmaceutical exports jumped 44.8 per cent in November, after sinking 47.0 per cent in October. Shipments of specialised machinery also posted a sharp increase of 64.7 per cent, while exports of petrochemicals went up 13.9 per cent. The non-electronic NODX as a whole rose 15.3 per cent, bouncing back from a 14.6 per cent decline in the previous month. The electronic NODX, which slipped 6.0 per cent in October, increased 3.5 per cent last month - the first expansion in nine months. The expansion was boosted by gains in the shipments of integrated circuits (+10.6 per cent), parts of PCs (+30.5 per cent) and disk media products (+9.7 per cent).

UOB's Mr Tan said continued growth in the electronic NODX could well fuel the projected stronger NODX growth in 2017. He noted that the electronic NODX's expansion in November was "in line with the past eight months of electronics production ramp-up as seen in the monthly production figures".

Also, the past four months of expansion - after an 18-month consecutive decline - in the new export orders for electronics PMI points to a pick-up in the electronic NODX in 2017, according to him.