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Singapore’s exports decline further in July

The 3.3 per cent dip in exports last month was due to a decrease in both electronic and non-electronic exports, trade agency IE Singapore says.

SINGAPORE: Non-oil domestic exports (NODX) in Singapore contracted 3.3 per cent on-year in July, dragged down by a decrease in both electronic and non-electronic exports.

The fall in NODX comes after a 4.6 per cent contraction in the previous month and a 6.6 per cent contraction in May, according to statistics released on Monday (Aug 18) by International Enterprise (IE) Singapore.

On a month-on-month seasonally adjusted basis, NODX rose by 2.5 per cent to S$13.9 billion in July, following the previous month's 1.5 per cent increase.

Electronic exports fell 7.9 per cent on-year last month, following the 17.4 per cent decrease in June. The decrease was largely due to shrinking sales of integrated circuits (IC) (-5.1 per cent), parts of PCs (-14.5 per cent) and disk media products (-18.5 per cent).

Non-electronic exports contracted by 1.1 per cent in July, in contrast to the 1.3 per cent expansion in the previous month. The decline was led by structures of ships and boats (-40.7 per cent), aircraft parts (-48 per cent) and civil engineering equipment parts (-25.4 per cent).

Economists say rising costs in Singapore are prompting companies, especially those in Integrated Circuits (IC), to relocate their production. 

UOB economist Francis Tan said: "Things manufactured in Singapore are no longer as cheap as before, so in that respect quite a number of manufacturing firms, particularly in the semi-conductor sector, are doing a lot more of the highly valued added products such as R&D and even testing services. So in fact quite a number of them don't make ICs in Singapore but they do import back the ICs for testing purposes and then they are re-exported out."

On a year-on-year basis, NODX to all of the top 10 markets – except the European Union, China, Taiwan and the US – fell in July. The top three contributors to the decline were Hong Kong, Indonesia and Japan.

Despite the overall decline in NODX, there are signs of improvement, as shipments to China, the US and EU gained pace. Exports to the EU jumped by almost 25 per cent year-on-year, while shipments to the US climbed by about 9 per cent - and those to China, by 7 per cent. 

Mr Edward Lee, Executive Director and head of ASEAN Macro Research for Regional Research at Standard Chartered Bank is optimistic about the future: "Looking ahead I do still think things will improve. Take a look at our latest PMI numbers, for example the very strong electronics sector numbers, take a look at the what China government is doing, take a look at potentially at what the ECB may do to support growth and even in the US actually growth is improving just maybe not as frothy or as strong as what Fed chair (Janet) Yellen would hope for."

Non-oil re-exports (NORX) declined by 1.7 per cent in July 2014, in contrast to the 7.5 per cent increase in June, due to the decline in both electronic and non-electronic re-exports.

Electronic re-exports decreased by 0.1 per cent in July, following the 6.4 per cent rise in the previous month. The contraction was due to telecommunications equipment (-18.4 per cent), PCs (-25.7 per cent) and consumer electronics (-8.6 per cent).

Non-electronic re-exports fell by 3.3 per cent last month, in contrast to the 8.7 per cent increase in June. The contraction was due to aircraft parts (-21.6 per cent), non-electric engines and motors (-26.7 per cent) and nickel (-49.1 per cent).

The latest purchasing manufacturers' index showed that Singapore's manufacturing activity expanded in July at its fastest rate in a year. For the year as a whole, Singapore key exports are forecast to contract by 1 to 2 percent.