Singapore’s July key exports fall 20.2% in steepest slide since January; economists expect more drops
Elysia Tan
SINGAPORE’S non-oil domestic exports (NODX) slid 20.2 per cent on the year in July, a sharper fall than June’s 15.6 per cent contraction, data from Enterprise Singapore (EnterpriseSG) showed on Thursday (Aug 17).
Marking the 10th straight month of decline, the month’s key exports slide surpassed the median 14.3 per cent drop forecast by economists in a Bloomberg poll.
Both electronics and non-electronics exports continued to decline on a year-on-year basis. The month also charted the steepest drop since January 2023, when it had fallen 25 per cent.
Following the July readings, Maybank economists Chua Hak Bin and Brian Lee lowered their NODX forecast, to a contraction of 9 per cent to 12 per cent, from a contraction of 6 per cent to 9 per cent previously.
DBS economist Chua Han Teng expects further year-on-year drops “in the near term”; UOB senior economist Alvin Liew expects “a few more months” of on-year contractions before recovery later in H2. RHB senior economist Barnabas Gan foresees contractions into Q3, and a recovery in Q4.
On a seasonally adjusted monthly basis, NODX dropped 3.4 per cent in July, reversing from the preceding month’s 5.2 per cent growth. Both electronic and non-electronic shipments declined sequentially.
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Key exports’ value hit S$14 billion last month, seasonally adjusted, down from S$14.5 billion in June. It also remained lower than the year-ago period’s S$17.4 billion and 2022’s average of S$16.6 billion.
Year on year, electronics exports shed 26.1 per cent in July, deepening from June’s 16 per cent fall. The decline was led by integrated circuits (-35.7 per cent), PCs (-46.1 per cent) and disk media products (-40.8 per cent).
Non-electronics shipments in July lost 18.5 per cent from the year-ago period, accelerating from the 15.6 per cent decline in June. Contributing most to the drop were non-monetary gold (-80.3 per cent), specialised machinery (-17.2 per cent) and petrochemicals (-22.8 per cent).
Barclays economist Brian Tan said the usually-volatile pharmaceuticals rose 2 per cent on the year, limiting the overall drop in exports.
The latest NODX print comes after Singapore’s manufacturing purchasing managers’ index remained in contractionary territory in July, for the fifth consecutive month.
EnterpriseSG, in its latest quarterly review of trade performance, downgraded its full-year NODX forecast to a contraction of 9 per cent to 10 per cent.
On the whole, NODX to Singapore’s top 10 markets shrank in July; only exports to the US recorded growth. The overall decline was led by falls in exports to the European Union (-38.6 per cent), Taiwan (-36 per cent) and China (-20.1 per cent). In June, NODX to China had posted 3.1 per cent growth.
“The sharp fall in exports to China demonstrates that the recovery in exports and manufacturing is fragile and uncertain,” said the Maybank duo. “China’s domestic demand is rapidly losing steam. Earlier hopes for a China reopening boost is giving way to risk of a China deflationary shock.”
The on-year deterioration of July’s NODX to China, against June’s positive performance, was primarily due to miscellaneous transactions, including non-monetary gold, they said. “Non-monetary gold’s contribution to NODX growth narrowed to one percentage point, from 24.7 percentage points in June (and 35.3 percentage points in May).
“But non-gold shipments remain tepid.”
UOB’s Liew said the resumption of NODX declines to North Asia, especially China, weighs negatively on the trade outlook. He continues to expect sustained weakness in global demand amid an ongoing electronics downcycle, which he believes has yet to bottom out.
“Despite NODX to the US turning positive in July, we are uncertain if it can be sustained.”
He expects NODX to improve in the later part of H2.
RHB’s Gan expects slowing global semiconductor billings to trough in the immediate months ahead, providing support for trade in H2. He also noted ongoing recovery in global economic data and relatively softer base effects towards Q4.
“We observe that the slowdown in NODX momentum is not in tandem with the current manufacturing landscape,” he said, highlighting June’s marginally-higher-than-expected industrial production and improved momentum.
While NODX momentum has slowed in the last two monthly readings, Gan believes it to be temporal, against a recovering global and Asean backdrop in H2.
“We believe we are on the cusp of a recovery in the US and global growth, with green shoots already evident in the US and Asia ex-Japan,” he said.
DBS’ Chua said: “The year-on-year declines could narrow towards year-end, as we see some silver lining. In seasonally adjusted level terms, NODX for both electronics and non-electronics have stabilised over the past few months.
“Singapore’s manufacturers are cautiously optimistic, with slightly positive business sentiment for H2 2023.”
He added: “A similar picture is seen for electronics firms, which supports a gradual improvement in shipments and production in the months ahead, alongside a turnaround in global semiconductor sales.”
Despite its forecast downgrade, Maybank’s team noted: “The year-on-year contraction in NODX volumes has consistently been less protracted than values since December 2022. The US manufacturing investment and construction boom will likely increase US import demand, which may help shore up Singapore’s and Asian exports.”
In line with the decline in NODX, total trade fell 20.8 per cent on the year in July, extending June’s 19.3 per cent drop. Both total exports and imports declined. On a seasonally adjusted monthly basis, however, total trade was up 1 per cent in July, following June’s 3.3 per cent growth.
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