Pharmaceutical segment leads trade drop in October

Its exports fell 47% YoY.

Oct’s NODX levels were 2.9% below 3Q16. In real terms, NODX fell 8.1% MoM SA , coming in 6.8% below 3Q, with the relatively smaller nominal decline likely reflecting a weaker SGD in the month, a report by Citi said.

The unexpected sequential NODX contraction was led by pharmaceutical sector, which saw trade exports falling 47% YoY. Electronics also posted a 6% decline.

Citi said the data affirmed MAS's view for trade-related sectors to continue posing “a drag on GDP growth in the quarters ahead amid rising global uncertainty and sluggish external demand.

"The sequential drop in NODX suggests demand for Singapore’s manufacturing sector (18% of GDP) may be lagging the recent pick-up in global PMIs, while the fall in NORX suggests wholesale and retail services (~19% of GDP) could remain depressed in 4Q," Citi said.

It furthered, "This comes on top of the contraction in domestically-oriented services, especially those related to consumer demand. For example, retail sales ex auto fell for the 13th consecutive month in Sep, reflective of the weakening jobs market and weak sentiment in general. On a brighter note, manufacturers appear to be rebuilding inventories of parts in anticipation of final demand, though how much of this inventory build is seasonal vs cyclical remains unclear."