UPDATE 1-Singapore June exports beat forecasts, outlook still murky

By Kevin Lim

SINGAPORE, July 17 (Reuters) - Singapore reported

better-than-expected export data for June on Tuesday, providing

a glimmer of hope that a prolonged slide in Asia's key

electronics sector has bottomed, but economists cautioned that

global demand still appeared weak.

The Southeast Asian city-state, whose open economy is seen

as a barometer for the region's propects, said non-oil domestic

exports (NODX) rose 6.8 percent in June from a year earlier,

beating the forecasts of all 14 economists polled by Reuters.

Singapore's domestic exports of electronics edged 1.6

percent higher in June from a year ago, while non-oil retained

imports of intermediate goods, a leading indicator of

manufacturing activity, rose for a second month after seasonal

adjustment.

On a seasonally adjusted month-on-month basis, NODX grew 6.7

percent after contracting 2.0 percent in May.

"The story we like is that at least electronics NODX looks

like it's stabilised -- it's not on a declining path anymore,"

said Selena Ling, head of treasury research and strategy at

Oversea-Chinese Banking Corp, Singapore's second largest lender.

"But if you look at the IMF downgrade of 2013 growth, it

seems like we don't expect a very strong pick-up in external

demand in the near term, especially on the euro zone front," she

added.

The International Monetary Fund (IMF) on Monday cut its

forecast for global economic growth and warned that the outlook

could dim further if policymakers in the euro zone do not act

with enough force and speed to quell their region's debt crisis.

Closer to home, Singapore electronics firm Hi-P

International said late on Monday it will shut its

Mexican subsidiary and report a loss for the second quarter

ended June, contrary to earlier guidance.

Data released overnight also showed U.S. retail sales fell

in June for the third straight month, the longest run of

consecutive drops since 2008 when the country was mired in

recession. Consumer spending drives about two-thirds of the U.S.

economy.

ELECTRONICS, PHARMACEUTICALS

Barclays economist Leong Wai Ho said the Singapore data

suggested the global economy was not as weak as some

commentators have suggested.

"We see reasons to be optimistic about a resumption of a

gradual recovery in electronics in the second half, driven by a

slew of product launches," he said.

Leong said the June export numbers also raises the chances

of a small upward revision to Singapore's second quarter gross

domestic product, which shrank 1.1 percent on an annualised and

seasonally adjusted basis, according to advance estimates.

The weak GDP data, which was released last week, had

prompted some economists to cut their growth forecasts for

Singapore.

But other economists warned against reading too much into

the numbers, noting the rise in June domestic exports, which

totalled S$15.7 billion ($12.4 billion), was due primarily to

highly volatile pharmaceutical shipments, which jumped 24

percent from a year earlier.

"The weak global economic conditions were still evident in

June's numbers if you look beyond the jump in pharmaceuticals,

which was not driven by a cyclical upswing but rather the usual

volatility associated with changes to the product mix," said

HSBC's chief economist for India and Southeast Asia Leif

Eskesen.

"Electronics is a better bell-weather of global economic

conditions and (Singapore's) shipments were relatively weak

across products and markets, although Hong Kong, Taiwan, and

Japan cranked up imports," he added.

Non-oil exports to the European Union rose 17 percent

on-year compared with a rise of 1.5 percent in May and a

contraction of 12.2 percent in April.

Shipments to the United States fell 2.0 percent last month

after shrinking 11.4 percent in May, while those to China

worsened, contracting 3.2 percent compared with a dip of 0.8

percent in May.

Key figures (y/y pct change)

June May April

non-oil domestic 6.8 3.2 1.7

exports

- to US -2.0 -11.4 -18.6

- to EU 17 1.5 -12.2

- to China -3.2 -0.8 3.8

electronics 1.6 3.9 1.0

pharma 24.0 0.3 -7.1

($1 = 1.2652 Singapore dollars)

(Reporting by Kevin Lim; Additional reporting by Eveline

Danubrata; Editing by Kim Coghill)

Source: http://news.yahoo.com/1-singapore-june-exports-beat-forecasts-outlook-still-034417847--business.html

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