Singapore's NODX fell 6.2% in August

It's worse than expected.

According to UOB Economic-Treasury Research, Singapore’s August non-oil domestic exports (NODX) surprised a generally optimistic market consensus (+2.4% y/y) on the downside and posted a contraction of 6.2% y/y, worse than a revised 1.9% y/y contraction seen a month ago.

The contraction was due to weak performance seen in both electronic exports (-9.2% y/y) and non-electronic exports (-4.7% y/y).

On a seasonally-adjusted basis, NODX declined by 6.0% m/m, worse than the 1.8% m/m contraction seen in the previous month.

Electronics NODX had contracted for the 13th month in a row, as segments such as parts of PC (-23.5% y/y), disk
media products (-16.9% y/y), and ICs (-14.6% y/y) continued to decline.

Within non-electronic NODX, weak pharmaceutical exports continued for the 3rd month in a row and contracted 31.1% y/y, weighed by declines also seen in structures of ships & boats (-95.8 % y/y), and aromatic chemicals (-54.4% y/y).

NODX to most top ten NODX countries declined, except for the China and Hong Kong. Top 3 contributors to the NODX contraction in August were the EU27, South Korea and Taiwan.

Although NODX growth had been disappointing, non-oil re-exports (NORX) had been growing strongly since April this year. In August, NORX grew 14.4% y/y, after posting an 8.1% y/y expansion in July.

Compared to the same period last year, this shows that although domestically-produced exports had been weak, Singapore’s trade sector continued to yield advantages from its trading/logistic/transshipment hub status as the wholesale trade industry ride on the wave of the trend in the improving regional trade.

Singapore’s trade agency had, last month, reduced their 2013 NODX forecast to 0-1%, from a previous 2-4%. Also, total trade forecast were also revised down to 2-3%, from 3-5%. NODX had contracted for the 7th consecutive month in August, declining 7.7% year-to-date.

With only 4 more months to go to the end of 2013, no growth in NODX will imply a 16.4% y/y growth rate for the period Sep-Dec.

The “no growth scenario” is the lower bound of the new NODX forecast by Singapore’s trade agency. Although we are expecting a cyclical recovery in global electronics demand in 2H13 to boost electronics exports, it will likely be a muted recovery.

With that, we are lowering our full year NODX forecast from -1% to -3% and this implies a growth rate of 7.0% y/y in the Sep-Dec period.