The modest improvement in this vital trade sector has led some economists to predict monthly exports could expand - when compared to the same month a year earlier - by December this year.

It has also fuelled growing optimism that the overall Singapore economy will achieve growth in the current second quarter over the previous quarter.

Last month, non-oil domestic exports contracted 12.1 per cent from a year earlier, according to the latest figures released by trade agency International Enterprise (IE) Singapore yesterday.

Although this was the 13th month of decline, it was better than the 14 per cent slump tipped by economists in a Reuters poll. It was also an improvement over the 19.2 per cent slump seen in April.

Mr David Cohen, an economist at Action Economics, said: 'The worst of the downturn is behind us. However, the question which remains is just how strong the recovery will be, due to the uncertainty regarding the strength of the rebound in the US and Europe.'

Month-on-month, May's exports rose 5.6 per cent over the previous month's figures after seasonal adjustment. This was also better than expected.

By contrast, April saw a month-on-month slide of 1.4 per cent.

HSBC economist Robert Prior-Wandesforde said: 'Evidence of a fledgling recovery in Singapore exports and industry is growing.'

Last month, the local manufacturing sector also showed signs of a turnaround. According to the latest Purchasing Managers' Index, released two weeks ago, factory output increased for the first time since August last year due to more orders and higher inventory levels.

Read the full story in Thursday's edition of The Straits Times.