Singapore’s NODX exports contract in December, growth likely to disappoint in Q1 2019

Singapore’s NODX data surprisingly contracted for the second consecutive month in December. NODX shrank 8.5 percent year-on-year, marking a quite subdued end to 2018. The year-on-year and sequential readings for the month were respectively the softest since October 2016 and June 2018. In the meantime, the November prints were downwardly revised to -2.8 percent. Markedly, the softness was widespread, throughout both electronics and non-electronics, and consistent with the recent trade data disappointments out from China, South Korea, Taiwan, Philippines and even Indonesia, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

Exports of electronics fell 11.2 percent year-on-year in the month, worst since February 2018. This also implied that the 4.3 percent growth in November was only an anomaly as it came after 12 consecutive months of contraction. Within electronics, the main contributors to the fall were PCs, disk media products and diodes & transistors that all recorded double-digit year-on-year contractions. Exports of non-electronics also dropped 7.4 percent year-on-year in the month, owing to lower exports of specialised machinery, pharmaceuticals and primary chemicals that also recorded double-digit year-on-year contractions.

Out of the top ten NODX, eight markets recorded contraction in December, with the drags mainly coming from the EU, South Korea and Malaysia. U.S. and China were the only two markets that recorded NODX growth. This implies a fall in global and regional growth prospects and was possibly worsened by the waning of some of the pre-emptive frontloading activities in the region in the third quarter 2018 in anticipation of the U.S-China tit-for-tat tariffs, said Selena Ling.

Looking ahead, given the high year-on-year base in the first quarter, NODX growth is expected to continue to disappoint barring any quick turnaround in U.S.-China trade talks and a strong resolution to the contentious issues between U.S. and China.

“For the full year of 2018, NODX grew by 4.4 percent yoy, half of the 8.8 percent yoy pace in 2017, and may face bleaker growth prospects ahead. We expect 2019 NODX growth to flatline yoy, which is at the low end of IESingapore’s official NODX forecast of 0-2 percent yoy”, added Selena Ling.