Monday, January 20, 2014

Singapore Exports Up in December

Singapore’s December non-oil domestic exports (NODX) bounced back with a venge¬ance after the slump in November. The headline NODX expanded 6.0% on-year, up from a fall of 8.9% previously. Sequentially, that translates into a surge of 9.2% on an on-month seasonally adjusted basis,
a strong rebound indeed from the 4.2% decline in November. While the turnaround is pretty much in line with our expectations, the strength did come as a pleasant surprise.
Firstly, the dip in the November NODX in our opinion is mainly due to two transient factors: a moderation in post-Christmas season demand and an industry-specific down¬swing in the biomedical cluster. At an absolute dollar value, the biomedical sector bounced back in December while sales for electronics components also picked up in the month, ahead of a forthcoming Chinese New Year lull.
It’s seasonal effect in full swing. Plants in China will typically ramp up their pro¬duction ahead of the New Year holiday when production will stop completely for about two weeks thereafter. Hence, orders for components from local manu¬facturers have a tendency to spike up before the festive season so as to cater to the rise in production. This is the main reason for the upside blip in December NODX on top of the fact that global economic conditions are generally improv¬ing.
That said, expect the NODX to moderate again in January on account of the fes¬tive season effect. But beyond that, exports and to a large extent, manufactur¬ing, will be on a gradual rising trajectory. This comes against the backdrop of the improvement in the global economic outlook.