S’pore exports slip in June, reflecting patchy global outlook

SINGAPORE — Sales of locally produced goods to overseas markets slipped in June after a huge gain in the previous month, confirming views that May’s improvement was not sustainable as prospects for the manufacturing sector remained patchy amid an uncertain global landscape.

The Republic’s non-oil domestic ­exports (Nodx) marked a return to contraction territory last month with a 2.3 per cent year-on-year fall, ­reversing the 11.6 per cent growth seen in May, showed data released on Monday (July 18) by trade agency International Enterprise (IE) Singapore. On a month-on-month seasonally ­adjusted basis, Nodx slumped 12.9 per cent in June, compared to May’s 16.8 per cent jump.

Economists polled by Reuters had forecast a steeper 3 per cent year-on-year fall, but a milder 10.3 per cent month-on-month decline. 

“This is yet again another reminder that prospects on the external front are not that bright after all … The surge in May was never meant to last. It was largely due to a spike in some unusual export products, which is unlikely to be sustainable,” said DBS senior economist Irvin Seah, referring to the jump in shipments of prefabricated buildings and gold that lifted May’s Nodx reading. 

Last month, the decline was broad-based across electronic and non-electronic products. Exports of electronic products contracted by 1.7 per cent from the same period a year ago, ­accelerating from the 6 per cent ­decline previously. This was largely due to smaller shipments of PCs, disk drives and parts of PCs. 

Shipments of non-electronic products slipped 2.5 per cent year-on-year in June after a 19 per cent expansion previously, with declines led by petrochemicals, primary chemicals and electrical machinery.

In terms of geography, China and the European Union were among the top contributors to June’s Nodx ­decline. Shipments to China, Singapore’s largest export destination, ­recorded the 12th consecutive month of contraction in June with a 9.9 per cent year-on-year fall, while those to the EU fell 5.8 per cent during the same period, the second straight month of contraction. These are indications the global outlook ­remained challenging, especially after Britain’s referendum to leave the EU, said economists.

“(Any impact from the referendum) will probably be more evident later in the third quarter. We do have some preliminary evidence that investment intentions in the UK are slowing down. That means that growth going forward would be pretty lacklustre,” said Credit Suisse economist Michael Wan. 

“Even though China had some better-than-expected numbers, our base case is that that will moderate in the second half of the year. It’s not ­immune to the global exports slowdown and what’s happening in Europe will also impact China,” he added. 

For Singapore, this means that the manufacturing sector is not out of the doldrums. However, the Nodx reading in the second half of this year may improve due to the relatively low year-ago comparison and other “green shoots” such as the expansion in Singapore’s industrial output, noted UOB economist Francis Tan.

“Industrial production has been ­expanding,” he said. “It’s a good sign that manufacturers are busy producing. Hopefully that will translate into better ­exports. But all things considered, it’s still not a story of strength in the manufacturing sector.”