Singapore's non-oil domestic exports (NODX) received a reality check in June with a 2.3 per cent contraction year on year, after surging 11.6 per cent in May.
As some private-sector economists predicted, May's rebound - driven by gold shipments, pre-fabricated buildings and pharmaceuticals - had proven unsustainable.
However, June's reading of -2.3 per cent was still slightly better than the consensus estimate of -3 per cent.
According to ANZ economist Ng Weiwen, the contraction should be seen in the context of a "normalisation" from the sharp jump in May, where gold exports surged nearly five-fold.
The drop in June's NODX was broad-based as both electronics and non-electronics NODX clocked a decline, data released by trade promotion agency International Enterprise (IE) Singapore showed.
Electronics NODX fell 1.7 per cent year on year in June, narrowing from a 6 per cent decline in May; export segments which took a tumble include PCs, disk drives and PC parts. But the easing in the pace of decline could be "reflective of some possible positive spillover from the regional mini-tech upswing, which has buoyed both South Korea and Taiwan exports", Mr Ng added.
One bright spot in June's report card was "signs of green shoots" in the export of integrated circuits (IC), noted UOB economist Francis Tan, who adding that the segment expanded 7 per cent after eight consecutive months of contraction. ICs contributed 46 per cent of total electronics exports last year.
Meanwhile, non-electronics NODX fell 2.5 per cent in June following an expansion of 19 per cent in May. The drop in non-electronics NODX was due to petrochemicals, primary chemicals and electrical machinery.
Month on month, NODX slumped by a seasonally adjusted 12.9 per cent in June, in sharp contrast to May which clocked growth of 16.8 per cent. This came on the back of contraction in non-electronics NODX, which outweighed the growth in electronics NODX, highlighted IE Singapore.
DBS senior economist Irvin Seah said: "The extent of the downswing has been more severe than anticipated. This is yet again another reminder that prospects on the external front are not that bright after all. And this is despite the better-than-expected advance GDP estimates in the second quarter."
June's reading brought the overall NODX figure for the first six months of this year to -4.5 per cent. Still, UOB's Mr Tan is banking on an improved performance for NODX in the second half of the year, with an expected contraction of 0.6 per cent year on year. Mr Tan's full-year forecast for NODX stands at -2.5 per cent.
In May this year, IE Singapore forecast that NODX for 2016 would fall in the range of -5 per cent to -3 per cent, revising an earlier forecast for between 0 and 2 per cent growth amid a gloomy outlook for trade and exports.
"Electronics and biomedical output have been improving of late according to the industrial production data for the January-May period and the 2Q16 GDP growth flash estimates," said OCBC Bank head of treasury research & strategy Selena Ling. "While it remains to be seen in the coming months if there could be some knock-on effects and downside risks to NODX growth to the EU28 market from the kneejerk sentiment reaction to the Brexit referendum, we anticipate that 2H16 NODX growth could improve slightly to -1.6 per cent given a relatively low base in 2H15."
In June, the slowdown in Singapore's largest export market, China, continued to weigh down on NODX performance. With China's deceleration being a structural one, the lacklustre NODX performance could last for a while, warned Mr Seah.
Contributors to the decline in June also included Indonesia, the EU28, Japan and Thailand.
However, there were others in the list of top ten NODX markets which registered growth, namely Taiwan, the US, Hong Kong, South Korea and Malaysia.
Meanwhile, non-oil re-exports rose 0.6 per cent, crossing into positive territory after a decline of 3.2 per cent in May thanks to the expansion in non-electronics NORX.
This article was first published on July 19, 2016.
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