Non-oil exports fall short of expectations

SINGAPORE'S exports shrank marginally last month, in a disappointing reversal after two months of surprise growth.

Non-oil domestic exports (Nodx) fell 0.2 per cent last month over May last year, far short of market forecasts of a 2.3 per cent expansion.

Nodx had grown 2.2 per cent in April and 18.5 per cent in March, sparking modest hopes of a recovery.

The weak trade data comes on the back of fresh signs of an industrial slowdown.

Jobs data out on Monday showed that the manufacturing sector shed 6,900 workers in the first three months of the year.

That same day, a 1.5 million sq ft swathe of land on Jurong Island went up for sale as chemicals giant Teijin Polycarbonate Singapore closed its doors.

DBS Bank economist Irvin Seah called the latest export data "a hard fall back to reality".

The main drag was electronics and chemical shipments.

Shipments of electronic products fell 2.5 per cent in May from the same month last year, according to data from trade agency International Enterprise Singapore.

"Singapore's tech exports in the first five months of 2015 are tracking almost 30 per cent lower than their level at this point in 2012," noted JPMorgan economist Ben Shatil.

Riding on a boom in the production of mobile phones and parts, lower-cost exporters in countries such as Vietnam have been eating up Singapore electronics exporters' share of the market, he said.

Singapore's chemical exports - mainly pharmaceuticals and petrochemicals - were down 3.8 per cent in May from a year earlier.

The case for a recovery in this sector is also weak. Pharmaceutical exports tend to be volatile, while analysts do not expect the price of oil to recover significantly from last year's crash any time soon, so the value of petrochemical sales will continue to suffer.

Shipments to six out of Singapore's top 10 export markets went down last month. The exceptions were the US, South Korea, Thailand and Hong Kong.

Weaker demand in Indonesia, the European Union and China weighed most heavily on exporters here.

Dr Tan Khay Boon, senior lecturer at SIM Global Education, believes any rebound in global demand will be US-led, given that Europe and Japan are still trying to kick-start their economies. As their currencies depreciate, Singapore goods are dearer to them.

"The only hope lies in a significant improvement in the US economy and a stronger US dollar to boost export demand," he said, noting that Nodx to the US posted a strong 18.1 per cent growth last month.

marilee@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on June 18, 2015, with the headline 'Non-oil exports fall short of expectations'. Print Edition | Subscribe