Singapore’s exports rose the most in 2-1/2 years in October, well over double expectations as surging sales to China helped more than recoup a decline the month before in a boost to the trade-dependent economy.
The affluent city state has benefited this year from an upturn in global demand, stoking a welcome recovery in its manufacturing sector after a prolonged period of sluggishness.
Non-oil domestic exports (NDOX) last month jumped 20.9 percent year-on-year, data from the trade agency International Enterprise Singapore showed on Friday, blowing past the 10.0 percent increase predicted by economists in a Reuters poll.
It was the biggest rise since March 2015, with annual shipments to China – Singapore’s largest export market – soaring 53.3 percent in October versus a 9.5 percent rise the month before. The better-than-expected figures reinforced analysts’ views that September’s poor result was a one-off. Exports had unexpectedly contracted 1.1 percent in September as electronics sales fell for first time in almost a year.
“The September numbers were a bit of a blip,” said Nomura economist Brian Tan, though he was somewhat cautious about the outlook for electronics sales.
Electronics exports, a major driver of shipments in recent months, rose 4.5 percent in October from a year earlier, while non-electronic products grew 28.5 percent.
With the exception of the September decline, exports of electronics grew at a double-digit pace for most of this year.
“Electronic growth is weaker…the base effect on this will only turn more unfavourable and cause the number to deteriorate further,” Tan said.
Singapore and other trade-dependent Asian economies enjoyed a strong tailwind from improved global demand, particularly for electronics products and components such as semiconductors.
Analysts expect the manufacturing boon to feed through to an upward revision in third quarter growth when final figures are released next week.
Prakash Sakpal, economist at ING, said in a note to clients that the positive trade impulse to economic growth and inflation meant there was a tighter bias for monetary policy.
“The bias to MAS policy is clearly towards tightening based on strong GDP growth and accelerating core CPI inflation. But the path to this outcome looks somewhat tentative,” he said.
The Monetary Authority of Singapore held policy steady last month but changed a reference to maintaining current settings for an extended period, a shift that analysts said created room for a tightening next year.