Singapore's exports exceed median forecast

July’s non-oil domestic exports (NODX) jumped 15.7% y/y in July (June: -8.8%), far exceeding Bloomberg’s median forecast of 1.2% (UOB: 2.8%).

Electronics NODX surged 16.5% y/y in Jul (Jun: -9.5%) owing to strength in integrated circuits and personal computers, while non-electronics NODX expanded by 15.5% y/y in Jul (Jun: -8.6%) on robust non-monetary gold as well as petrochemicals exports. This is a sharp rebound from an upwardly revised 8.8% y/y fall in June. Drivers for the upgrade include (1) the stronger July NODX, (2) the relatively positive electronics & non-electronics export outlook, and (3) the change in our base case FFR view for a September rate cut of 25bps.

The upgrading of consumer electronics to incorporate generative AI-related applications as well as the ongoing replacement of worn-out equipment acquired during the pandemic are positive tailwinds for the segment. Meanwhile, non-monetary gold (+260.3% y/y), petrochemicals (+28.1%) and specialized machinery (+8.0%) contributed the most to the growth in non-electronics NODX.

Optimistic recovery prospects in the electronics segment - Given the inherent volatility in NODX, we smooth the data by computing the year-on-year changes of the average NODX for the last six months (“6MMA y/y”) to capture key trends.

By key markets, on a 6MMA y/y basis, NODX to the US (Jul: -15.1%, Jun: -17.0%) and EU27 (Jul: -26.4%, Jun: -32.3%) saw double digit contractions possibly as the effects of elevated policy rates weigh on investment and consumption activity in these economies. Meanwhile, NODX to China slowed significantly in Jul but still remained positive (6MMA y/y Jul: 3.9%, Jun: 12.9%), reflecting the still weak consumer sentiment weighed down by sluggish home prices which continued to fall in Jul (note).

We maintain our 2024 NODX growth forecast at 2.5% (YTD: -2.1%), which is weaker than the narrowed official forecast range of 4.0%-5.0% and expect a more meaningful sequential recovery in 4Q24. We upgrade full-year NODX growth from 0.5% to 1.5% while keeping GDP growth forecast at 2.5% YoY. Export growth was led by China and US demand, in line with our global growth assumptions.