Singapore's NODX edges up by 5.9% thanks to strong electronic exports

A substantial surge in electronics shipments propelled Singapore’s NODX in September 2020

Singapore’s trade sector continued in the growth, with Non-oil domestic exports (NODX) expanding for the fourth consecutive month in September 2020 thanks to growth in shipments of both electronic and non-electronic shipments.

Official figures released by trade agency Enterprise Singapore (ESG) on Oct 16 indicated a 5.9% year-on-year expansion to NODX in September, extending the 7.7% growth logged in August.

Still, the pick-up fell short of the 11.5% increase anticipated by analysts in a Bloomberg poll.

September’s the increase was heralded by a 21.4% year-on-year surge in shipments of electronic products – a substantial increase from the 8.3% growth registered in August.

This marks the fifth consecutive month of growth for the electronics NODX segment says Selena Ling who heads the treasury research and strategy department of OCBC Bank.

While, the momentum in the latest numbers was accelerated by the low base in 2019, she notes that it was close to her forecast of a 19.8% year-on-year increase to the segment.

This was fueled by higher exports of ICs (+30.1%), parts of PCs (+22.7%) and disk media products (+15.2%), ESG observes.

Non-electronic shipments rose 1.8% in September, narrowing from the 8.3% increase seen in the previous month.

The numbers were boosted by higher exports of non-monetary gold, specialized machinery and food preparations by 53.4%, 34.2% and 30.7%, respectively.

To Ling, an “unexpected drag” to the segment came from pharmaceutical exports – which she attributes to the high base in 2019.

Looking ahead, she does not expect the pharmaceuticals cluster to drive NODX growth, given the “vacillating global vaccine prospects with the recent pause in two vaccine trials”.

On a month-on-month seasonally adjusted basis, NODX contracted by 11.3% in September – a significant deviation from the 10.5% expansion registered in the previous month. This comes as the decline in non-electronic domestic exports outweighed the growth in that for electronics, notes ESG.

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These developments translated to $13.8 billion in takings for September’s NODX, down from August’s $15.6 billion.

In this time, Singapore’s NODX to its top 10 markets grew “as a whole” in September, with exports to EU27 (+60.5%), Malaysia (+28.8%) and the US (+3.7%) leading the way.

Interestingly, the increase in shipments to the EU27 group is an extension from the 30.2% growth rate registered in the previous month. The stronger performance in September is a result of higher exports of non-monetary gold, specialised machinery (+153.9%) and parts of PCs (+108.2%).

The shipment levels to Malaysia is another interesting one, as it comes after a 5.1% decline in August. ESG attributes this reversal to higher exports of ICs (+103.9%), diodes & transistors (+29.5%) and specialised machinery (+26.3%).

As for the NODX from the US – the latest showing is narrower than the previous month’s 14.0% expansion. Still, it was driven by exports of food preparations (+99.0%), measuring instruments (+43.5%) and telecommunications equipment (+26.3%).

On the contrary, NODX to Hong Kong (-26.7%), Indonesia (-16.0%), Thailand (-15.7%) and South Korea (-5.0%) staged declines, possibly due to the ongoing movement control restrictions imposed to curb the spread of Covid-19 infections.

Meanwhile, Singapore’s non-oil re-exports (NORX) was up 5.1% in September, widening from the 0.1% increase it posted in the month before, thanks to a substantial increase in the shipment of electronic products.

See also: Recovery in electronics exports pushes Singapore's NODX up by 7.7% in August

The segment was up 23.6% year-on-year - higher than August’s 12.3% rise – due to higher shipments of ICs (+22.5%), diodes & transistors (+58.2%) and PCs (+94.9%).

This increase helped mitigate the 10.9% year-on-year contraction to the exports of non-electronic products. This comes on the back of a plunge in the shipments of aircraft parts (-42.8%), piston engines (-69.3%) and non-electric engines & motors (-16.7%).

On a seasonally adjusted month-on-month basis, NORX inched up by 1.0% in September – narrower than the previous month’s 9.9% surge. This equates to $24.1 billion in takings for September’s NORX, up from $23.9 billion in August.

NORX shipments to the top 10 markets grew, with the key contributors being China (+35.9%), Hong Kong (+24.5%) and the US (+15.7%).

Looking ahead, Ling says NODX growth for 4Q2020 ending December “may run into a more bumpy road”.

Given the latest Covid uptick in Europe with and the Conditional Movement Control Order in Malaysia, it remains to be seen if NODX growth momentum can be sustained in the months ahead for these key NODX markets as consumer demand may take a hit from the re-tightened restrictions, she notes.

“Moreover, with the upcoming US elections, there is some market concern that a contested outcome could engender a protracted period of uncertainty and weigh on overall business and consumer confidence,” she adds.

To this end, Ling expects NODX growth for 4Q2020 to ease to around 2.2% year-on-year.

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