Singapore's exports down 6.1% in October compared to a year ago
By Ng Baoying, Channel NewsAsia | Posted: 17 November 2009 1350 hrs

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SINGAPORE: Singapore's key exports contracted for the 18th month in a row, falling by 6.1 per cent in October from a year ago.

This was much weaker than market expectations of a 0.2 per cent climb, hurt by weak demand from the US and European Union.

With rising unemployment in the US, consumers there are holding back on spending.

Singapore's exports to the US fell by 10.9 per cent on year earlier.

Meanwhile, demand from Europe was also weak with shipments falling by 21.7 per cent.

All that helped to push the headline export numbers lower by 6.1 per cent on year.

When compared to the previous month, they fell by 13 per cent on a seasonally adjusted basis, reversing a three-month upward trend.

This is one of the sharpest drops in about seven years.

Alvin Liew, economist, Standard Chartered, said: "When we look at underlying reasons, it could be that the inventory restocking cycle is almost completed. That's probably one of the downsides for a sector like electronics. At the same time, Christmas orders were not as rosy a picture as some of us might be anticipating."

Irvin Seah, economist, DBS Group Research, said: "Another factor I want to highlight is the technical aspect. On a non-seasonally adjusted basis, the NODX only declined by 2.3 per cent month-on-month. But on seasonally adjusted basis it was down by 12.6%.

“Typically when you do seasonal adjustments, the month-on-month swing will be smoothed out. But in this case it was the opposite. I think to some extent it was aggravated by technical aspect, which is how the Department of Statistics does their seasonal adjustments."

Shipments of electronic products dropped 13.8 per cent on year, mainly due to lower exports of integrated circuits and disk drives.

Meanwhile, exports of non-electronic products declined by half a percent, led by lower exports of petrochemicals, civil engineering equipment parts and electrical power machinery.

Despite the weaker than expected numbers, some analysts remained positive.

Mr Seah added: “The data coming from some regional economies are pretty good in October, so in a way I don't think this October NODX number would in any way suggest that the recovery process has been derailed.

“Our view is that the recovery process has remained intact. It's just that this V shaped recovery in Asia is gradually giving way to a square root shaped recovery.

“In other words we are expecting a slightly more subdued pace of growth going forward. Still positive, but down to a single digit growth rather than double dig growth which we have seen in last two quarters.”

They said the headline exports numbers may turn positive in November, thanks to an improving global economy and a low comparison base.

But they note that for exports to be sustained, recovery in the employment situation in key markets is critical.

Mr Liew added: "For exports to be sustained, one of the more important factors would be to see a recovery of employment situation in key export markets like G3 economies. We need to see employment situation stabilising. We need to see net job creation to start taking place, also at the same time to see unemployment coming down."

Singapore's non-oil domestic exports is a closely watched barometer of the health of the trade-dependent economy.

Overall, the government is expecting GDP to contract by 2 to 2.5 per cent this year. - CNA/vm