Singapore's weak March exports cast pall over outlook

Singapore’s exports in March fell more than expected on declines in shipments to the United States and Europe, official data showed on Thursday, clouding the city-state’s trade outlook.

Non-oil domestic exports slid 6.6% in March from a year earlier, according to the trade agency International Enterprise Singapore, far below a median forecast of a 0.8% dip in a Reuters poll.

The exports also fell a seasonally adjusted 8.9% from February, a severe shortfall of the estimated 1.6% decline.

“This suggests an export recovery story is very patchy,” said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp.

“Exports are likely to be flat or underperform in the coming months,” Ling added.

Shipments to the European Union fell 27.8% in March from a year earlier, while exports to the United States dropped 1.8%.

“Underlying momentum may be weaker than expected,” said Leong Wai Ho, an economist for Barclays in Singapore.

“While Singapore is still very leveraged to the global business cycle, I think the lags may have also lengthened,” he said.

Exports to China, however, rose 16.1% from a year earlier with a 25.9% jump in exports of non-electronic products.

“Since petrochemicals shipments spiked since January, we also noticed a similar jump in exports to China. That may suggest that a lot of this petrochem is going to China,” said Leong at Barclays.

Singapore’s petrochemicals exports in March rose 43.1% year-on-year after enjoying double-digit growth in January and February.

Still, the overall growth in non-oil domestic exports to China in March was slower than February’s 35.5%.

China’s economy grew at 7.4% in the first quarter from a year earlier, suffering the slowest growth in 18 months, data showed on Wednesday.

ELECTRONICS, PHARMACEUTICALS WEAK

Singapore’s exports of pharmaceuticals and electronics in March contributed to overall decline in March.

Exports of pharmaceuticals declined 44.6% from a year earlier.

Electronics shipments fell 16.1%, with exports in personal computer parts sliding 38.6%.

In 2013, the manufacturing sector made up roughly 19% of Singapore’s economy. Electronics accounts for 30% of total manufacturing activity, while biomedical manufacturing makes up 20%.

“We’ve seen a pretty big decline in the electronics exports numbers and that tells you that Singapore is still exporting some of the older technology products,” said Vaninder Singh, an economist for RBS in Singapore.

Singapore’s electronics manufacturers have struggled to tap surging demand for smartphones, unlike rivals in South Korea and Taiwan.

Despite weak March export data, economists said Singapore is unlikely to revise down the first quarter growth numbers.

Singh at RBS said he was expecting a slight upward revision, on the back of firmness in private consumption and services-related activity.

The city-state’s economy grew 5.1% in January-March period from a year earlier, according to the government’s advance estimate.