SINGAPORE (Nikkei Markets) — Singapore’s core exports unexpectedly fell in September from a year ago as its factories shipped fewer electronics, countering the regional trend and casting doubts about the strength of the economic recovery in the city-state.
Electronics exports “declined off the high base a year ago, after 10 consecutive months of growth,” trade agency International Enterprise Singapore said, suggesting the drop was just a blip.
Analysts said further data would show whether September’s performance was one-off or the start of a sustained decline.
IE Singapore’s figures, released early Tuesday, showed Singapore’s non-oil domestic exports, or NODX, fell 1.1% in September from a year ago following four straight months of growth. The figure was well below economists’ forecasts for growth of more than 10% and August’s rise of 16.7%.
Shipments of electronics declined by 7.9%, led by a drop in overseas sales of personal computers, while non-electronic NODX rose by 1.9%, boosted by larger shipments of non-monetary gold, petrochemicals and specialized machinery.
From a month ago, the city-state’s core exports fell 11% in September to a seasonally adjusted 13.1 billion Singapore dollars ($9.7 billion), reversing August’s gain of 4.2%.
The drop in September exports comes as a surprise as advance estimates released just days ago showed the domestic economy grew by a better-than-expected 4.6% year-on-year in the third quarter, powered by a 15.5% expansion in manufacturing, which accounts for about 20% of gross domestic product.
Singapore excludes oil and re-exports from its key export figure to provide a better gauge of economic activity on the island. This is because prices of refined oil products tend to be volatile, while total exports include the billions of dollars of goods produced elsewhere that are shipped through Singapore’s mega container port, the world’s second busiest after Shanghai’s.
“The weak Singapore NODX are at odds with strong electronics-led export surges in Korea and Taiwan in September,” said Prakash Sakpal, an economist at ING in Singapore. He added that the city-state could revise growth downwards next month when detailed GDP data for the quarter are released.
South Korea had earlier reported its exports soared 35% in September from a year ago while Taiwan posted growth of 29%.
DBS Group, Singapore’s largest lender, said in a commentary that traders were now less certain the central bank could return to a Singapore dollar appreciation policy at its half-yearly review in April. The local currency fell against the greenback after the export data.
Singapore manages monetary policy by letting its dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band. The central bank can also adjust the width of the band to allow more volatility.
In its policy statement last Friday, the Monetary Authority of Singapore said it would keep the local dollar on a zero-appreciation path as it has done in the past 18 months. MAS was, however, vague on whether it might keep policy neutral for an “extended period”, prompting some traders to bet on a stronger Singapore currency.
Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp, said the fall in domestic shipments of electronics marked the first contraction since October and was the weakest performance since July 2016.
However, she also noted shipments to seven of Singapore’s 10 largest markets continued to grow, indicating underlying demand for the city-state’s products.
“It remains to be seen if the September NODX data was an anomaly,” she said.