Jan exports up 13% despite electronics slide

Singapore

SINGAPORE'S trade got off to a strong start in this year, with growth in non-electronics exports more than making up for the second straight month of decline in electronics exports.

Non-oil domestic exports (NODX) went up 13 per cent year-on-year in January, according to data released on Thursday by trade agency International Enterprise (IE) Singapore.

This was up from a 3.1 per cent rise in December. It also far outpaced economists' estimates of 8.9 per cent growth.

Economists nonetheless expect overall NODX growth to moderate this year, after last year's brisk pace. Full-year figures released on Wednesday showed NODX growth of 8.8 per cent in 2017.

On a month-on-month seasonally adjusted basis, NODX edged down 0.3 per cent in January instead, after the previous month's 1.9 per cent decline, as the fall in electronic NODX outweighed non-electronic NODX growth.

January's year-on-year growth was due to a 20.7 per cent spike in non-electronic NODX - the eighth straight month of growth - after a 6.8 per cent rise in December.

Contributing the most to this growth were non-electric engines and motors (up 383.6 per cent), food preparations (up 100 per cent), and measuring instruments (up 43.2 per cent).

The strength of non-electronics NODX more than made up for a continued slide in electronic NODX.

On a year-on-year basis, electronic NODX fell 3.9 per cent in January, after a 5.3 per cent fall in December.

The biggest contributors to the decline were integrated circuits (-10 per cent), parts of PCs (-31.4 per cent) and disk drives (-39.4 per cent).

These three products collectively account for more than three-fifths of electronics NODX.

The current cyclical slowdown in Asia-Pacific semiconductor sales data - which had peaked in April 2017 - "does not bode too well" for Singapore's electronics exports, said UOB economist Francis Tan.

NODX to eight of the top 10 markets grew in January, with the exceptions being Taiwan (-12.7 per cent) and Thailand (-5.4 per cent).

Growth was led by the United States (up 53.4 per cent), the euro zone (up 16.9 per cent) and Japan (up 28.8 per cent).

Continuum Economics chief economist for Asia Jeff Ng said: "NODX growth looks to remain supported by the upswing in global demand."

He noted that this is the fourth consecutive month in which NODX to the US and the euro zone has climbed by double digits.

The growth in NODX to the US was led by non-electric engines & motors - up a whopping 425.7 per cent - as well as by food preparations and non-alcoholic beverages.

UOB's Mr Tan noted, however, that a slowdown in China's factory activities points to slowing export growth for Singapore in the coming months.

"Although we remain positive in our outlook on the overall NODX expansion going ahead, still driven by semiconductor NODX, we have already seen signs that the strong double-digit growth exhibited since November 2016 is not sustainable over the next few months," he said.

UOB is maintaining its forecast of 6.5 per cent NODX growth this year.

IE Singapore's estimate, revised upwards following the 2017 full-year figures, is for NODX growth of between 1 per cent and 3 per cent this year.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye similarly expect trade growth to soften this year, "especially as electronics exports are expected to weaken, given the high base from last year".

They noted that the fall in electronics NODX comes after stellar performance in the first three quarters of 2017, with monthly growth averaging 10.5 per cent.

Non-oil re-exports, a proxy for wholesale trade services, also did well in January, rebounding with growth of 4.9 per cent after having declined 7 per cent in December.

This was on the back of both non-electronics (up 8.3 per cent) and electronics (up 1.8 per cent).