Singapore’s exports in June grew at a stronger-than-expected annual pace, although a disappointing monthly drop suggested a more sustained period of external improvement is necessary to lift the trade-reliant economy amid fitful global demand.
Non-oil domestic exports (NODX) rose 4.7 percent in June from a year earlier on strong shipments to the United States and China, trade agency International Enterprise Singapore said in a statement on Thursday.
That compared with a 2.0 percent expansion forecast in a Reuters poll. In May, the city-state’s shipments contracted a revised 0.3 percent year-on-year as sales to Europe and China declined.
Exports on the month fell 2.4 percent in June on a seasonally adjusted basis, worse than a 1.2 percent decline forecast in the survey, and extended a 3.3 percent drop in May.
“We’re seeing a good stabilization, a short-term reprieve, but looking forward I think it’s still a bit cloudy,” said Edward Lee, regional head of research for Standard Chartered Bank in Singapore.
While the trade-dependent economy’s beleaguered manufacturing sector showed tentative signs of recovering last month, underlying weakness in China’s economy despite better-than-expected second quarter GDP growth has analysts taking a cautious view on Singapore’s near-term outlook.
Singapore’s economy contracted in the second quarter as sluggish global demand and government restrictions on foreign labour knocked the manufacturing sector, raising the prospect of further monetary easing later this year.
“I wouldn’t be celebrating at the moment,” said Lee, noting that shipments were down for a third consecutive month on a month-on-month basis.
Shipments to China – Singapore’s biggest export market – rose 12.2 percent in June on-year, helped by strong sales of electrical machinery and specialised machinery. In May, sales to China fell 4.3 percent.
“We are hopeful that we’ll see some stabilisation of growth in the second half for the Chinese economy, because all the crisis policy measures they’ve taken should take effect over the next three to six months,” said Selena Ling, an economist at Oversea-Chinese Banking Corp.
Annual sales to the United States jumped 32.2 percent in June, from an 18.1 percent growth in May, thanks to surges in shipments of printed matter, non-electric engines and structures of ships.
Manufacturing is a key driver of Singapore’s exports, but it has been underperforming neighbours such as South Korea and Taiwan due to fierce competition and a lack of popular high-tech products such as smartphones. Erratic global growth has added to the stress on the economy.