Singaporean NODX continues to shrink in August, likely to contract less severe in Q3 and Q4

Singaporean NODX contracted 8.9 percent year-on-year in August, as compared with consensus expectations of a contraction of 10.6 percent year-on-year and July’s figure of a contraction of 11.2 percent. Sequentially, NODX rose 6.7 percent. Non-electronics exports dropped a smaller 2.2 percent year-on-year in August which helped to partially mitigate the 25.9 percent year-on-year contraction in electronics exports.

The drag for non-electronics exports was driven by pharmaceuticals, petrochemicals and primary chemicals. Headline electronics exports continued to record a double-digit shrinking in August, partially because of a high base last year. Falls were driven by ICs, PCs, and diodes & transistors. Nevertheless, the underlying electronics momentum seems to be steadying with the second month of sequential growth, noted Selena Ling, head of Strategy and Research at OCBC Bank.

Amongst the top 10 NODX markets, China was the sole bright sport, recording a sharp 38.5 percent year-on-year recovery in August as compared to a 5.1 percent year-on-year fall in July. The support came from a 58 percent year-on-year sharp rise in non-electronics NODX to China, whereas electronics NODX continued to fall 20.1 percent year-on-year.

“At this juncture, it is difficult to determine how much of the pickup was due to front-loading activities ahead of the 1 September tranche of US tariffs against Chinese imports or due to the lower NODX base in 2H18.  It remains to be seen if the NODX growth rebound for China can be sustained, albeit China has embarked on coordinated policy easing including conventional monetary policy measures like RRR cuts which should help to cushion its slowdown”, stated Selena Ling. 

Also, there were these volatile swings for the U.S. market where NODX grew 12.2 percent year-on-year in July before contracting 15 percent year-on-year in August, again mainly contributed by the non-electronic exports, namely due to non-electric engines & motors, pharmaceuticals and ICs.

“We expect NODX growth to potentially contract a less severe 7.8 percent yoy and 6.2 percent yoy in 3Q and 4Q19 respectively to bring the full year to -8.9 percent yoy, within Enterprise Singapore’s 2019 NODX forecast of -9 percent to -8 percent yoy. This is compared to the NODX slump of 14.6 percent yoy in 2Q19 and 10.5 percent for the first eight months of 2019”, added Selena Ling.