November's 16.5% annual fall in tech sector worst in 3 months

Risk of technical recession looms in 4Q12.

By now, it’s a familiar story: decent non-tech export growth was insufficient to compensate for yet another month of dismal tech, causing Nov’s NODX to retreat a sharper-than-expected 2.5% yoy (consensus: +1.7% yoy), said CIMB.

CIMB notes that while the 6.3% yoy growth in non-tech was within expectations (+13% yoy in Oct), the 16.5% yoy fall in tech exports exceeded consensus  of -12%. "Unless non-tech comes to the rescue again in Dec 12, persistent tech weakness could cause NODX to fall outside IE and our growth forecasts of 2-3% for this year (11M12: 2.2%)," said CIMB.

Here's more from CIMB:

After a 12.6% yoy rise in the previous month, non-tech DX growth (67% of NODX) moderated to 6.3% in Nov 12. Stronger chemicals including pharmaceuticals were offset by weaker non-chemicals. The surprise was tech again (33% of NODX). Contributing to the 16.5% yoy tech decline in Nov (worst in three months) were weaker exports of semiconductors (-21.5%) and disk-media products (-11.6%).

The fourth straight month of yoy declines in chip exports this year is a cause for concern as chips are among Singapore’s top manufactured exports. They accounted for 14.4% of 11M12 NODX, ahead of pharmaceutical exports (13.5%). Our channel checks suggest that demand for tech parts/components related to PCs and laptops, in general, remains soft. 

Risk of technical recession in 4Q12
NODX shrank 2.5% yoy in Nov (+7.9% in Oct) vs. consensus and our forecasts of +1.7%. Unless there is a massive lift from non-tech DX, Dec’s NODX may decline 4-6% yoy due mainly to the base effect (non-tech DX had jumped 17.7% yoy in Dec 11 from a spike in lumpy exports). The poor NODX showing over the last few months had pulled 11M12 NODX growth down to 2.2% yoy (11M11: +1.6% yoy). And persistent tech weakness suggests that Singapore remains at risk of a technical recession in 4Q12.

All eyes on Nov 12 industrial output due out month-end (26 Dec).