SINGAPORE - Singapore's non-oil domestic exports (Nodx) remained mired in negative territory for an eighth consecutive month in October, coming in worse than analysts expected.
Shipments sank 12.3 per cent, from an 8.1 per cent drop in September, with the pace of decline reversing three consecutive months of easing despite talks of an interim trade deal between the United States and China in the bruising trade war.
The drop was larger than an expected 10 per cent fall from a year ago, according to a Bloomberg consensus poll, and the lowest since June's 17.4 per cent decline.
Shipments of non-electronic products fell 11 per cent last month compared with the same period a year ago, down from a 2.3 per cent decline in September. The biggest contributors were pharmaceuticals, petrochemicals and primary chemicals.
Electronics shipments continued their double-digit fall, dropping 16.4 per cent in October, although performing slightly better than the 24.8 per cent contraction the month before. Exports of integrated circuits, personal computers and telecommunications equipment contributed the most to the decline.
OCBC Bank’s head of treasury research and strategy Selena Ling noted that electronics shipments have seen double-digit contractions for 10 months this year, except in February.
While the fall in electronics exports seems to be starting to ease, there is not yet a clear pick-up – unlike in previous years where October figures would have received a boost from pre-Christmas shipping.
She added: “It’s a timely reminder that this trade and tech war between the US and China really has taken a toll on global demand.”
Even as the general expectation is for an interim trade deal to be inked, people have become quite immune to the ups and downs in the trade negotiations, with hopes on the phase one signing being “discounted”, she said.
Looking ahead, economists expect stabilisation rather than a strong recovery in growth, given the muted demand conditions in the near-term.
Barclays economist Brian Tan noted that global growth is expected to slow next year, and progress on trade talks may not change this trajectory.
A slowdown in US and China “will definitely weigh on growth in Singapore, and exports will be the main casualty of that”, he said.
Although Enterprise Singapore said the October Nodx drop was “mainly due to the high base (of comparison) a year ago in non-electronics”, such as in pharmaceuticals shipments, Mr Tan said the larger decline compared with the month before suggests the overall economy is still not picking up strongly.
“More broadly, however, Nodx levels still appear to be bottoming out despite the sequential decline in October, which should help to put the brakes on further year-on-year declines,” he said.
But economists are still looking to an upward revision of earlier estimates for Singapore’s third quarter growth, in part given that industrial production figures for September were better than expected.
Ms Ling said the estimated 0.1 per cent growth could be revised to 0.5 per cent, even as poor Nodx numbers reinforce the point that there is unlikely to be much of a manufacturing or trade boost going into the fourth quarter.
Mr Tan is expecting third-quarter growth to be revised to 0.6 per cent, although the extent of improvement next year remains uncertain.
On a month-on-month seasonally adjusted basis, Nodx fell by 2.9 per cent in October, from the previous month’s 3.3 per cent dip. Electronics Nodx grew while that of non-electronics declined.
Shipments to most of Singapore’s top 10 markets fell as well except to Taiwan, with the decline mainly due to exports to Japan, Europe and the United States.
Total trade dropped 9.7 per cent year-on-year, with the seasonally-adjusted level of total trade at $84 billion, down from $84.7 billion the month before.
Oil domestic exports decreased by 21 per cent, while non-oil re-exports fell by 2.3 per cent from a year ago, after 2.9 per cent growth in September.