Exports jump in April after shrinking for two months

April's strong showing was boosted by a 19.6 per cent expansion in non-electronic shipments. But electronics Nodx fell 6.9 per cent - the fifth straight month of decline.
April's strong showing was boosted by a 19.6 per cent expansion in non-electronic shipments. But electronics Nodx fell 6.9 per cent - the fifth straight month of decline.ST PHOTO: KEVIN LIM

Economists say it is unlikely to last because of slowing electronics sector and trade tensions

After shrinking for two straight months, Singapore's exports recovered last month as volatile pharmaceutical shipments rebounded.

But economists expect this surge to be short-lived because, in addition to slowing momentum in the electronics sector, trade tensions are weighing on the export outlook.

Singapore's non-oil domestic exports (Nodx) rose 11.8 per cent in April, blowing past economist estimates of a 7.3 per cent increase.

This followed from a 3.2 per cent decline in March and a 6 per cent fall in February.

April's strong showing was boosted by a 19.6 per cent expansion in non-electronic shipments - with non-monetary gold, food preparations and the volatile pharmaceuticals segment contributing the most to growth.

Conversely, electronics Nodx fell 6.9 per cent - the fifth straight month of decline. This protracted soft patch in electronics exports is "puzzling", especially since electronics manufacturing output has remained robust, said Maybank Kim Eng economist Chua Hak Bin.

Electronics production, for example, expanded 12.4 per cent in March, even though electronics exports contracted 7.5 per cent that same month. "The puzzling divergence in electronics exports and production could be in part because orders, while being booked in Singapore, are produced and shipped from outside Singapore - for example from Penang," noted Dr Chua.

Still, the momentum in the electronics sector is slowing, economists say. An electronics boom propelled Singapore's export growth to a seven-year high last year, but the segment is expected to expand at a more moderate pace in the coming months.

Manufacturing growth likely peaked in the first quarter, said Dr Chua. "The ongoing US-China trade noises may be dampening business sentiments, while the smartphone demand cycle is fading," he said.

The services sector will probably be more resilient and is expected to contribute a greater proportion of growth for the rest of the year, he added.

Other segments of the April trade data were more upbeat. Non-oil re-exports - often used as a proxy for the performance of the wholesale trade sector - grew by 8.2 per cent last month after falling 0.4 per cent in March. This came as non-electronic re-exports grew while electronics decreased.

Nodx to most of Singapore's top 10 markets expanded in April, except Taiwan, South Korea, Malaysia and Hong Kong.

The largest contributors to growth were China, the European Union and the United States.

DBS senior economist Irvin Seah said overall export prospects were mixed. The global economic outlook remains sanguine, but trade tensions and financial market volatility are resulting in heightened uncertainty, he noted.

In addition, manufacturers were also beginning to face capacity constraints, further weighing on growth.

"Indeed, the trajectory for export growth is gradually flattening out. But for now, risks on the horizon remain well-balanced," Mr Seah said.

A version of this article appeared in the print edition of The Straits Times on May 18, 2018, with the headline 'Exports jump in April after shrinking for two months'. Print Edition | Subscribe