No turnaround in sight as non-oil domestic exports slip 3.3% in July

Weak electronics exports led the slide.

Singapore’s non-oil domestic exports (NODX) continued to contract in July, as the manufacturing sector continues to underform and struggle amidst restructuring and stricter foreign worker policies. Non-oil re-exports, which is a good gauge of wholesale trade services, also reverted to a contraction.

According to a report by the Bank of America Merrill Lynch Global Research, the 3.3% contraction in NODX was slightly better than the 4.6% contraction in June.

“The government recently cut its NODX forecast, expecting it to shrink 1% to 2% in 2014. NODX contracted 2.3% during the first half of 2014 from a year ago. NODX continues to decline, despite a stronger expansion in July exports seen in China, Taiwan and Korea. IE Singapore expects a "modest improvement" going forward, in tandem with a gradual pick-up in the global economy. Restructuring and stricter foreign worker policies, in our view, are likely to limit the lift from a modest pick-up in the global economy in the second half,” noted the report.

Here’s more from BofA Merrill Lynch:

Electronics NODX contracted 7.9% following sharp double-digit contractions the past two months. PCs and parts of ICs expanded +12.7% and +4.8% respectively, while disk media products, parts of PCs and ICs continued to contract. 

Non-tech NODX reverted to a contraction (-1.1%) in July, hurt by aircraft parts (-48%), structures of ships & boats (-40.7%), civil engineering equipment parts (-25%), and pharmaceuticals (-5.7%). Petrochemical exports continued to expand at a strong double-digit pace. On a mom sa basis, NODX expanded +2.5% from June (vs. previous month's +1.5%). 

Non-oil re-exports (NORX) reverted to a contraction in July, falling 1.7% from a year ago. Non-oil re-exports is a good gauge of wholesale trade services, which account for more than 10% of GDP. Electronics NORX fell 0.1%, while non-electronics contracted 3.3%. On a mom sa basis, NORX fell 6.2% in July, a deeper contraction vs. -0.4% in June.