Singapore August Exports Plunge, Adding to Asia Weakness
09/17/2012| 02:10am US/Eastern
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-- Exports drop 9.1% on month, worse than the forecast 0.7% decline
-- Decline follows weak exports from China, South Korea
-- Fall is broad-based as non-electronics shipments shrink
(Re-casts, adds economist quote in 5th paragraph, further detail on non-electronics sector in 9th paragraph).
By Martin Vaughan
SINGAPORE--Singapore exports shrank more than expected in August, highlighting fears that a slowing Chinese economy and lackluster European demand will remain a drag on Asian economies.
The city-state's weakness follows sluggish trade data from China, South Korea and Taiwan, bolstering the picture that even the more robust regions of the global economy aren't immune from the slump in the big Western countries.
Singapore non-oil exports fell a seasonally adjusted 9.1% from July, accelerating that month's 3.6% decline, trade promotion agency International Enterprise Singapore said Monday. That was much worse than the 0.7% decline forecast in a Dow Jones Newswires survey. From a year earlier, exports sank 10.6% from a year, far steeper than the forecast decline of 3.0% and reversing July's 5.7% rise.
Shipments of electronics, a mainstay for the region's export machine, led the decline, falling 11% on year and reversing a modest July rise. This comes as slow growth in the U.S., a likely tumble by the euro zone into recession and a sharp slowdown in China have damped demand for computer parts and other goods. August is usually a good month for Singapore's electronics exports due to seasonal buying.
"The takeaway here is that the tech sector hasn't improved," said Alastair Chan, an economist at Moody's Analytics. "It doesn't bode well for Taiwan, South Korea and other makers of electronics. I would think we are heading into a weak Christmas season."
Singapore's export drop has "dramatically increased" the chance that the economy, which contracted in the three months through June, will slide into recession this quarter, said Credit Suisse economist Michael Wan.
That puts more pressure on the central bank to ease policy next month. The Monetary Authority of Singapore, which uses the exchange rate rather than interest rates as its policy tool for the small, trade-reliant economy, is increasingly expected to relax its bias toward steady appreciation of the Singapore dollar at its October policy meeting.
Shipments of non-electronics products sank 10.4% on year, compared with a 7.8% rise in July.
An 87% decline in the marine sector dragged the sector overall, although this mostly reflected a statistical payback for large orders to Europe a year earlier. "Given the full order books of (Singapore-based rig-builders) Keppel and Sembcorp Marine, we would expect a boost in the coming months" to exports of marine equipment, Barclays economist Wai Ho Leong said in a research note.
Shipments to the European Union lagged the most, falling 28.7% in August in nominal terms after a 1.5% decline in July. Exports to China fell 4.4% after growing 8.0% the previous month.
Exports to the U.S. grew by 0.7%, far too little to offset the large drop in shipments to Europe, while exports to Taiwan and South Korea continued to register strong growth.
Write to Martin Vaughan at martin.vaughan@dowjones.com
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