July 17, 2014 / 2:20 AM / 3 years ago

UPDATE 2-Singapore's June exports slide on weak electronics shipments

* Non-oil domestic exports -4.6 pct y/y in June, below expectations

* Electronics exports -17.4 pct y/y in June after -15.3 pct in May

* Export underperformance may be due to structural issues (Recasts, adds comment)

By Masayuki Kitano

SINGAPORE, July 17 (Reuters) - Singapore's exports fell in June from a year ago as electronics shipments slumped, adding to fears that economic restructuring may be eroding local manufacturers' competitiveness.

Singapore's exports of electronics fell 17.4 percent year-on-year in June after a 15.3 percent decline in May, trade agency International Enterprise Singapore said on Thursday. That took non-oil domestic exports down 4.6 percent in June from a year ago - double the 2.3 percent drop forecast in a Reuters survey.

"This reinforces that Singapore's exports are underperforming... Singapore's exports are among the worst in Asia," said Tim Condon, head of research Asia for ING Bank in Singapore.

"My conjecture is that this is a structural issue and it's related to the (government) productivity drive, that some of Singapore's exporters have relocated to Malaysia," Condon said.

Electronics is a key element of Singapore's exports but the sector is not well-placed enough in the electronics supply chain to profit much from growth in smartphones and other recreational tech products.

"If you look at all the figures, it's a broad-based decline in electronics across all segments. It doesn't look good," said Chua Hak Bin, head of emerging Asia economics for Bank of America Merrill Lynch in Singapore.

The contraction was in contrast to the solid electronics exports seen from countries such as South Korea and Malaysia, he said.

"This adds weight to the hypothesis...that restructuring, in particular the stricter foreign worker policies, may be hurting manufacturing competitiveness," Chua added.

Singapore's government has been working to reduce a politically unpopular reliance on foreign labour as part of a push to increase the economy's productivity, but the move has led to a tight labour market, putting upward pressure on wages.

Singapore's unit labour cost index for the whole economy rose to 131.9 in first quarter 2014 from 125.6 in Q4 2013, the Department of Statistics said. The manufacturing unit labour cost index was 105.8 in the first quarter from fourth- quarter 2013's 102.1.

Month-on-month basis, non-oil domestic exports rose a seasonally adjusted 1.5 percent in June, falling well short of a 4.0 percent increase forecast by the Reuters poll.

While that was an improvement from a 7.5 percent drop in May, the three-month moving average of the monthly percentage change in exports was barely positive at 0.8 percent, showing how exports have struggled to gain traction from one month to the next.

Singapore's non-oil exports also tend to be volatile because a significant portion comprises pharmaceuticals and oil rigs, whose orders and output can vary sharply from month to month.

Underscoring such volatility, exports of pharmaceuticals surged 24.3 percent from a year ago in June, after tumbling 26.3 percent in May.

Many economists had predicted at the start of the year that a recovery in the United States and European economies would boost Singapore's exports, but signs of that filtering through have yet to fully materialise.

According to a Bank of America Merrill Lynch estimate, Singapore's non-oil domestic exports fell 2.3 percent in the first half of 2014 compared to the same period a year ago.

"What is really unusual is that exports typically tend to do very well and are very much leveraged to the global growth cycle and yet, they seem to be ironically going in the inverse direction," said Bank of America Merrill Lynch's Chua.

Non-oil domestic exports to the European Union were down 3.9 percent in June from a year ago, following a 22.6 percent drop in May. Exports to the United States fell 2.9 percent from a year ago, while shipments to China rose 5.3 percent.

The weak export numbers came in the wake of data earlier this week that showed Singapore's gross domestic product contracted in April-June for the first time in seven quarters, hit by a sharp drop in manufacturing activity. (Editing by Eric Meijer)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below