Singaporean NODX contracts year-on-year in November, likely to return to expansion in 2020

Singaporean NODX dropped 5.9 percent year-on-year in November, while it rose 5.8 percent sequentially, as compared with consensus expectations of a year-on-year fall of 6.4 percent and a sequential rise of 5.8 percent. On a nominal basis, the NODX levels were largely stable from the month before, but the high base from a year ago led to a year-on-year change that is less flattering than it looks.

Electronics NODX stayed in the contraction territory for the third consecutive month at -23.3 percent year-on-year, a run stretching back from December 2018. The global deceleration in smartphone and PC demand, in addition to the ongoing trade war, has negatively impacted domestic electronic shipments and industrial production. There are emerging signs that the electronics sector is starting to turn the tide, however, with both disk media and diodes recorded annual growth after at least 12 months of contraction, noted Howie Lee, Economist, OCBC Bank.

Non-electronics exports grew 1.3 percent year-on-year in November, the first growth since February 2019. This was mainly helped by exports of non-monetary gold. For the top 10 NODX markets, exports to the U.S., Indonesia and Thailand saw year-on-year growth in November, although the other markets continued to dwell in negative territory. The return to growth in exports to the Indonesian and Thai markets are especially encouraging, given that growth rates for both hovered in the red for 12 and eight months respectively. Trade in the region has mainly taken a hit this year because of the slowdown in demand for goods globally; a return to trade growth with neighbouring economies implies a turning of tide in global goods demand.

“NODX growth for 2019 is expected at -9.1 percent yoy; we forecast NODX in 2020 to return an expansion of 2-4 percent. The low base beginning last December suggests that November’s contraction of 5.9 percent yoy might possibly be the last in a run stretching back from Mar 2019;  we are hopeful of a return to expansion from Dec 2019 onwards, although ebbs and flows are to be expected given the continued volatility in world trade”, added Howie Lee.