Lunar New Year distortions not to blame for weak NODX print

Slowing China growth is key culprit.

This morning's non-oil domestic exports (NODX) figure may have been slightly distorted by the Lunar New Year celebrations, but the holiday is not entirely to blame for the surprisingly low print.

According to Francis Tan, Economist at UOB, one of the key reasons for the decline was due to the Lunar New Year falling in February this year, compared to January in 2014.

“Having fewer working days in February 2015 compared to the same month last year meant that nominal export values simply could not keep up pace. A common way of analysis is to aggregate both January and February data and comparing it with the same period a year ago as this will negate the seasonal effect. However, even after doing this exercise, Singapore’s January-February NODX still contracted 2.4% y/y in 2015,” he said.

HSBC economist Joseph Incalcaterra added that LNY distortions do not entirely explain the weak reading although it did cause a disadvantageous base effect for this year.

“The impact on NODX to China is far greater than the distortions China reported to its own import numbers, caused by the reduced working day count in the month of February. China is Singapore's largest export market, and the Greater China region, including Taiwan and Hong, encompasses nearly 30% of total NODX. We believe slowing activity in China also explains a significant part of the contraction,” he noted.