Singapore’s NODX rises better-than-expected in July; NODX 2018 growth seen at 4-5 pct: OCBC Bank

Singapore’s non-oil domestic exports rose a better-than-expected 11.8 percent y/y (4.3 percent m/m s.a.) in July, up from June’s 1.1 percent y/y (-10.8 percent m/m s.a), beating market consensus forecast. While electronics exports continued to contract at a more modest 3.8 percent y/y (June: -8.6 percent y/y), non-electronics exports surged 18.8 percent (June: 4.5 percent y/y), mainly attributable to pharmaceuticals (109.2 percent versus 19.1 percent previously).

Electronics exports were dragged down by ICs, diodes & transistors and parts of PC, whereas non-electronics exports saw contributions from food preparations (120.4 percent) and primary chemicals (41.3 percent y/y) in addition to pharmaceuticals.

However, pharmaceuticals output and exports can be rather volatile depending on the turnaround for each production cycle, so it is unclear how long this current uptick will sustain beyond the immediate few months ahead.

"Our 2018 NODX growth forecast is 4-5 percent y/y, which is above the IESingapore’s recently upgraded forecast of 2.5-3.5 percent y/y," OCBC Bank commented in its latest research report.

Meanwhile, the July NODX print marks a healthy start for NODX to 2H18 and brought the NODX growth for the first seven months of 2018 to 6.2 percent y/y. However, the higher 9.7 percent y/y NODX growth seen for August-December 2017, and the escalating US-Sino trade war may still pose some headwinds for NODX growth in the coming months.