NODX back in the mire in November

[SINGAPORE] Another false dawn. The long-awaited recovery has yet to emerge despite the cautious optimism read earlier into October's growth in non-oil domestic exports (NODX).

In November, NODX slipped back into the negative territory it has been mired in for most of this year. It slid 8.8 per cent year-on-year after a 2.8 per cent expansion in the previous month, latest trade figures released yesterday by trade promotion agency International Enterprise Singapore showed.

This surprised private-sector economists who were expecting a 4.3 per cent jump in November's NODX.

On a month-on-month basis, exports fell 9.3 per cent in seasonally adjusted terms after expanding 3.2 per cent in October. Economists had forecast a 2.8 per cent month-on-month rise.

Even non-oil re-exports, perhaps the only bright spot in a year of export underperformance, saw their year-on-year increase slashed to 11.2 per cent last month from 26.7 per cent in October.

IE Singapore blamed NODX's dismal showing on a decline in shipments of both electronic and non-electronic goods. Electronic shipments extended their 1.4 per cent decline in October to 8.9 per cent in November.

Non-electronic domestic exports slipped 8.8 per cent - a reversal from the previous month's 4.9 per cent growth - dragged down by pharmaceuticals (-46.9 per cent) and structures of ships and boats (-82.5 per cent).

Not surprisingly, the latest drop in NODX has raised some concerns.

"We all know how volatile Singapore's export numbers are, so we won't read too much into one single month's data," said Glenn Maguire, ANZ Bank's chief economist for Asia Pacific. "But the broad trend is one where NODX exports, in seasonally adjusted level terms, have been broadly flat for almost a year now."

Last month's year-on-year decline in NODX was the ninth over the past 11 months. This comes barely three weeks after IE Singapore slashed its full-year NODX growth forecast to between -5 and -4 per cent, from 2-4 per cent.

In the first nine months of the year, NODX fell 7.1 per cent.

NODX's persistent decline, even as other Asian exporters are making improvements, prompted Chua Hak Bin of Bank of America Merrill Lynch to ask: "Is Singapore losing its competitive edge?"

"Disparity between Singapore versus other Asian exporters is wide," he said in a brief report.

Exports improved in November for China (+12.7 per cent) and and stayed positive for South Korea (+0.2 per cent) and Taiwan (+0.04 per cent).

Year-to-date, Dr Chua estimates that Singapore's NODX has dropped 6.3 per cent, compared with a growth of 0.9 per cent for Taiwan, 1.7 per cent for Korea and 8.2 per cent for China.

"Asian trade activity is gaining strength, but Singapore exports, particularly tech, are losing market share," he warned.

But sounding a more optimistic note, Citigroup's Kit Wei Zheng said the sequential declines in the NODX numbers came on the heels of two straight months of expansion. "Volatility notwithstanding, broad export trends actually appear broadly stable."

Average October-November headline and electronics levels are still only slightly below their third-quarter averages, while the "core" NODX (stripping out lumpy pharmaceuticals and ship exports) is, in fact, above, he noted.

Philip McNicholas of BNP Paribas is hopeful that increased demand in Europe and the United States will give the NODX a fillip in 2014.

Except for China, the US and Taiwan, Singapore's domestic exports to its top 10 markets fell in November. The European Union, Hong Kong and South Korea were the top three contributors to the decline.

Shipments to the EU, Singapore's biggest market, tumbled 26.6 per cent in November, after a 12.3 per cent decline the previous month.

Those to the US jumped 10.3 per cent, compared with a 15.5 per cent decrease in October.

Even exports to China, the biggest consumer of Singapore-made goods, grew 16.2 per cent - slower than the previous month's 21.8 per cent increase.