Aug 17, 2016 - Flash Notes ... Second, the recovery in Singapore's manufacturing ... Although today's July NODX data was
Francis Tan
[email protected] Global Economics & Markets Research Email:
[email protected] URL: www.uob.com.sg/research Wednesday, 17 August 2016
Singapore: July NODX Disappoints With A Larger-Than-Expected Contraction
Flash Notes
Singapore’s July non-oil domestic exports (NODX) fell 10.6% y/y, worse than a 2.5% y/y contraction expected in a Bloomberg poll, as well as from the revised 2.4% y/y decline in the month of June. On a m/m SA basis, NODX fell 1.8% in July, continuing the 13.0% contraction a month ago.
The disappointing July NODX numbers were due to contraction in both the electronic and non-electronic segments. Electronics NODX fell 12.9% y/y in July, following the 1.7% y/y decline in June, as exports of PCs (-36.0% y/y), parts of ICs (-46.3% y/y), and diodes & transistors (-19.5% y/y) fell.
Non-electronic NODX declined by a larger rate of 9.5% y/y in July, in contrast to the 2.6% y/y contraction in June, and was led by the decline in the exports of petrochemicals (-35.0% y/y), civil engineering equipment parts (-58.3% y/y), and specialized machinery (-16.7% y/y).
Non-oil re-exports (NORX), a gauge on the regional/global trading sentiments, declined 1.2% y/y in July, compared to the 0.4% y/y expansion a month ago, due to the decline in electronic NORX (-5.9% y/y) which outweighed the expansion in non-electronic NORX (+4.1% y/y).
The top contributors to the NODX contraction in July were China (-16.6% y/y), United States (-19.1% y/y), and Indonesia (-22.6% y/y).
Singapore’s NODX in the first half of 2016 had registered a contraction of 4.5% y/y, signaling that the export and manufacturing sector is not fully out of the pit-hole yet, and global trading volume still has a lot to catch up. However, we are expecting some positive development in the trade sector in the second half of 2016. First, global trading activities seem to be picking up some pace. The Baltic Dry Index, an indicator of global trade volume, had gained 136% since February 2016 to date. This may bode well for global trading volume in the months ahead. Second, the recovery in Singapore’s manufacturing activities recently may bode well for exports in the coming months, as it had reversed the contractionary trend seen over the past 18 months before that. Third, the trade agency reported that NODX registered flat growth in 2Q 2016, and shows a recovery from the 9.0% y/y contraction in 1Q 2016, as the export performance of non-electronic NODX was better and may experience potential upsides. With that, the trade agency had also narrowed its full-year projection towards the upper end of its forecast range to between -4.0% and -3.0%.
Although today’s July NODX data was dismal, it does not change our outlook of the potential pick-up in global trading activities in the months ahead. We agree that it will be difficult to project accurately the eventual timing of the positive spillovers for Singapore’s exports as it will entail even more variables (such as domestic cost competitiveness), and not just stronger global trading flows. That said, we maintain our full year NODX growth forecast of a contraction of 2.5%. This implies that second half performance would be better than the first half (-0.6% y/y in 2H vs -4.5% y/y in 1H).
Flash Notes Wednesday, 17 August 2016
1 Page
July NODX Disappoints With A Larger-Than-Expected Contraction Indicator (% y/y) Total NODX
Share (2015)
May-16
Jun-16
Jul-16
100%
11.6
-2.4
-10.6
Electronics
30%
-6.0
-1.7
-12.9
IC
14%
-4.8
7.0
-1.0
Parts of IC
1%
-4.3
1.4
-46.3
PC
3%
-26.0
-29.0
-36.0
Parts of PC
3%
-12.6
-8.5
-18.8
Disk Drives
1%
-24.6
-26.9
-17.1
Telecom Equipment
1%
-0.8
4.0
-23.4
Consumer Electronics
0%
86.1
64.9
10.2
Diodes & Transistors
2%
-7.4
-2.9
-19.5
70%
19.0
-2.6
-9.5
30%
-4.1
-9.0
-9.3
Non-Electronics Chemicals Pharmaceuticals
11%
5.6
-1.2
12.7
Petrochemicals
10%
-12.1
-15.6
-35.0
Source: CEIC, IE Singapore
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