Why Singapore exports' rally is losing steam

The 1.2% slump is a clear sign of lethargy.

Whilst the decline in the headline figure for non-oil domestic exports was due to non-electronics exports’ high base, it remains clear for analysts at DBS Group Research that Singapore export rally is now losing its steam.

According to DBS Group Research, Singapore's exports are showing some lethargy, with the headline NODX figures posting a 1.2% decline in May following a 0.8% decrease in the previous month.

It was the non-electronics export which has been the key drag but electronics exports remained buoyant.

"This is consistent with our view that export demand may be peaking. In the latest set of May 2017 purchasing managers’ index figures, the overall manufacturing sector PMI eased to 50.8, down 0.3 percentage point from the previous month although electronics PMI rallied to 52.4, from 51.6 previously," DBS Group Research analysts noted.

They furthered, "Plainly, while the electronics cluster continues to be the bright spark, the fact that there is marginal spillover to the rest of the economy remains a concern."

The analysts argued that some sideways moves in the sequential series should be expected as the export rally comes to an end.

"Such tepid movements can be expected in the coming months before the downward trend becomes more pronounced at the later part of the year. Tighter credit conditions and stiffer regulations on the property market in China could also weigh on consumer sentiment and indirectly on Singapore’s exports going forward," they said.