Risks are teeming beneath Singapore’s robust June NODX print

Export sales are still slipping.

Singapore’s non-oil domestic exports (NODX) posted a surprisingly robust 4.7% growth in June, but analysts warn that risks are teeming beneath the rosy headline print.

“Despite the encouraging year-on-year figure, the sequential decline of 2.4% MoM sa is a concern. Note this follows a 3.3% slide in the previous month. That is, the low base has helped in lifting the YoY figure but in effect, export sales are still slipping,” said Irvin Seah, senior economist at DBS.

Philip McNicholas, economist at BNP Paribas, noted that the surprise uptick was mostly driven by the SGD’s weakness versus the greenback.

“SGD depreciation played a central role in this better-than-expected export performance, adding 7.5pp to the y/y headline. On a USD-basis, we estimate NODX contracted 2.6% y/y. This tempers the positive signal from the better-than-expected print, and we remain downbeat in our  assessment of Singapore and broader ASEAN’s Q2 export performance,” McNicholas said.

The economists warned that Singapore’s overall export landscape continues to be marred by both internal and external headwinds.

“Beyond the rising external headwinds and global uncertainties, Singapore manufacturers are also struggling with the triple whammy of higher business costs, labour crunch and a strong currency. While manufacturers are finding it difficult to take on new orders given supply side constraints, they are also losing their price competitiveness to regional players,” Seah noted.