Singapore March exports recover, beat expectations; electronics still weak

SINGAPORE - Singapore's non-oil domestic exports (NODX) rose 8.0 per cent in March from February after seasonal adjustments, beating expectations, in a sign that its manufacturing sector has begun to stabilise after a weak start to the year.

However, the pick up was uneven with the volatile pharmaceutical sector showing signs of improvement and electronics displaying continued weakness despite stronger global demand for semiconductors.

"There was a pretty spectacular rebound in pharmaceuticals. Pharma had been falling practically all of the second half of 2012 and in the first two months of the year," said Barclays economist Joey Chew.

March's better-than-expected exports should result in a slight upward revision to first quarter gross domestic product, she added.

Singapore last week released advance estimates that showed its economy contracted by 1.4 per cent in the first quarter from the fourth quarter on a seasonally adjusted and annualised basis.

The central bank, however, said it expects Singapore's manufacturing sector and export-oriented services industries to improve gradually over the course of the year, and reiterated its outlook of 1-3 per cent growth for the full year.

The improved showing by Singapore manufacturers, who export the bulk of what they produce, comes amid a spate of weak economic data that has raised questions about the strength of the global economic recovery.

On Monday, world markets were roiled after China's economic recovery unexpectedly stumbled in the first three months of 2013, while a recent series of weak data in the United States suggested the world's largest economy lost steam heading into the second quarter.

From a year ago, Singapore's non-oil domestic exports shrank 4.8 per cent to S$14.8 billion ($11.98 billion), trade agency International Enterprise (IE) Singapore said. Electronics exports dropped 17.9 per cent in March from a year ago, while pharmaceutical shipments gained 2.9 per cent year-on-year.

March's pharmaceutical exports of S$2.25 billion were more than double February's figure of S$1.05 billion when activity slowed due to the Lunar New Year holidays.

Economists polled by Reuters had expected non-oil domestic exports to rise 4.9 per cent month-on-month after seasonal adjustments but fall 6.3 per cent year-on-year. Trade agency IE Singapore said the city-state's domestic exports of electronics fell 2.1 per cent in March from February after seasonal adjustment.

Barclay's Chew noted that Singapore's electronics exports remained relatively weak despite signs of an improvement in global demand for semiconductors as reflected in the widely followed North American semiconductor equipment industry book-to-bill ratio and Singapore's own manufacturing purchasing managers' index (PMI).

"I don't understand why the improvement in electronics PMI hasn't translated into higher orders and production," she said, referring to Singapore's positive electronics PMI readings for February and March.