Exporters started the second half of the year on a strong footing, but some economists are warning that the good times might not last.
The pickup in global trade that has benefited Singapore is threatening to moderate in the coming months on slower growth in China, they said.
Electronics shipments were still the key driver behind Singapore's robust trade performance as non-oil domestic exports rose 8.5 per cent last month from the same period a year earlier, according to IE Singapore data out yesterday.
This came in slightly below economists' expectations of a 9.1 per cent expansion and was also down from June's 8.8 per cent rise.
The slower-than-expected showing was due largely to the volatile pharmaceuticals segment, where shipments plunged 54 per cent from a year earlier.
This was offset in part by resilient electronics shipments, which rose 16.3 per cent in July over the same month last year - the ninth consecutive month of growth.
Exports to Singapore's top 10 non-oil domestic export markets were mostly up, with the exception of the European Union and the United States.
SIGNS OF LETHARGY
The party is still ongoing, just that the music is getting softer.
DBS BANK SENIOR ECONOMIST IRVIN SEAH
Some economists have cautioned that growth in electronics exports might be peaking.
DBS Bank senior economist Irvin Seah said Singapore's export performance is "holding up but increasingly showing signs of lethargy".
In addition, the slowing Chinese economy is expected to weigh on Singapore's shipments in the coming months. China is Singapore's largest trading partner.
"So plainly, the party is still ongoing, just that the music is getting softer. Keep an eye on China's economic numbers to gauge the extent of moderation in Singapore's export growth going forward," added Mr Seah.
Citi economist Kit Wei Zheng said he was "not overly concerned" about the dip in pharmaceuticals shipments in the latest data.
"The data is consistent with our view that external demand will continue to support overall growth, though momentum may moderate," he noted.
In addition, strong growth in non-oil re-exports - a proxy for wholesale trade services - suggests that "outside of manufacturing, trade-related services continue to benefit from sustained growth in regional trade activities". Non-oil re-exports surged 17.5 per cent last month after expanding 8.3 per cent in June.
Mr Albert Loh, chief executive of electronics manufacturer PTS Technologies, said the company is seeing strong external demand for products related to the Internet of Things and data analytics.
The firm makes radio frequency identification tags.
"Our customers in the US are starting to place orders again because inventories are drying up. That's a good thing because it shows there is demand," said Mr Loh. "They are also forecasting higher demand for 2018... On the whole, sentiment seems to be improving."