Singapore exports unexpectedly rise on sales of ships, boats: update

Singapore’s exports unexpectedly rebounded in August as sales of ships, boats and optical apparatus countered a slump in electronics caused by weakening global growth.

Non-oil domestic exports rose 5.1% from a year earlier, after a 2.8% drop in July, the island’s trade promotion agency said in a statement today. The median of 14 estimates in a Bloomberg survey was for a 6.5% decline.

Europe’s failure to resolve its debt crisis and diminishing US jobs growth have hurt Asian exports and trimmed expansions from China to the Philippines, prompting central banks to hold back on further tightening monetary policy. The recovery in overseas sales last month may not be sufficient to prevent Singapore’s economy from contracting for a second quarter, according to Bank of America Corp.

“The components that are pretty sensitive to the business cycle, like electronics, did more poorly whereas the gain was generated largely from the lumpy segments such as ships,” said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch. “I am reluctant to say we are completely out of the woods and we’re still assuming that a technical recession is likely.”

A technical recession is usually defined as two consecutive quarters of declines in gross domestic product, which contracted in the city state in the three months through June from the previous quarter.

Policy Implication
The slowdown in economic growth may prompt the central bank to loosen its monetary policy stance at its half-yearly review next month, Chua said. The island uses the exchange rate as its main tool to manage inflation.

The Singapore dollar fell 0.3% to $1.2457 against the US currency as of 9:01 a.m. local time, according to data compiled by Bloomberg.

The Singapore government lowered its forecasts for 2011 economic and export growth last month and Finance Minister Tharman Shanmugaratnam said last week the island won’t be immune to a global slowdown.

Singapore’s overseas sales are sometimes supported by non- electronics goods as the nation built industries such as pharmaceuticals and marine engineering to reduce its reliance on one type of product.

Electronics shipments by companies such as contract manufacturer Venture Corp. dropped 19.4% in August from a year earlier, after declining 16.9% the previous month.

Petrochemicals, Ships
Non-electronics shipments, which include petrochemicals and pharmaceuticals, increased 20.4%. The increase was led by ships, boats and optical apparatus, and disk media products, according to today’s report. Pharmaceutical shipments fell 7.1% after surging 48.5% in July.

The performance of Singapore’s pharmaceutical industry is volatile as production swings by companies such as Sanofi- Aventis SA can cause industrial output to fluctuate from month to month. Drug companies sometimes shut plants for cleaning before making different products.

Singapore’s non-oil exports rose a seasonally adjusted 8.3% last month from July, when they declined 2.3%, today’s report showed.

Singapore cut its forecast for 2011 export growth last month, saying non-oil domestic exports will probably climb 6% to 7%, less than a previous prediction of 8% to 10%.