Singapore Exports Drop Adds to Signs of European Crisis Fallout: Economy

Singapore’s exports fell for the first time in three months in January on lower electronics and petrochemical shipments, as Europe’s debt crisis crimped demand and the Chinese New Year holiday shortened the working month.

Non-oil domestic exports slid 2.1 percent from a year earlier, after a 9 percent gain in December, the trade promotion agency said in a statement today. The median of 15 estimates in a Bloomberg News survey was for a 1.6 percent decline. Shipments to Europe plunged 14.5 percent.

“It’s too early to say if exports have bottomed out as the electronics sector still remains uncertain, given there is still weakness in Europe,” said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. “With the U.S. showing signs of improvement, we may see better numbers in the second half of this year for electronics.”

Asian stocks rose today, with a regional benchmark gauge set for a ninth weekly rally on signs the U.S. expansion is gaining strength after a report yesterday showed Americans filed the fewest claims for jobless benefits since 2008. Singapore’s gross domestic product shrank less than initially estimated last quarter, a report showed yesterday, suggesting the economy is withstanding Europe’s fiscal woes.

The MSCI Asia Pacific Index (MXAP) gained 1.2 percent to 127.32 at 1:04 p.m. in Tokyo, set for its longest run of weekly gains since December 2005. Stocks reversed a global slump yesterday after the U.S. jobs data that showed claims slid to a four-year low, while housing starts and the Federal Reserve Bank of Philadelphia’s economic index topped forecasts.

Second Recession

Singapore’s exports also fell as Asian nations celebrated the Lunar New Year in January this year. Factories from China to Vietnam typically shut during the holiday and reduce production. Demand for goods made in the region has also weakened as Europe faces its second recession in less than three years, contributing to an economic contraction in Singapore last quarter.

Singapore’s non-oil exports increased a seasonally adjusted 0.9 percent last month from December, when they climbed a revised 13.5 percent, today’s report showed. Economists surveyed by Bloomberg had predicted a 9 percent decline.

“Though many external risks remain, we are finally seeing signs that export growth may stabilize or begin to pick up slowly in the coming months,” said Vincent Conti, a Singapore- based analyst at Australia & New Zealand Banking Group Ltd.

Productivity Improvements

Policy makers from Indonesia to the Philippines have eased borrowing costs as the European crisis hurts demand for their countries’ exports. Singapore will unveil its annual budget today, with the government expected to announce measures to address the soaring cost of living and help citizens cope with a slowing economy, as well as push for improvements in productivity.

In Europe today, Germany may say producer prices rose 3.2 percent in January from a year earlier, after climbing 4 percent in December, according to the median estimate of economists surveyed by Bloomberg. A U.K. report will show retail sales declined last month from December, a separate survey showed.

The U.S. Labor Department may say the cost of living rose 0.3 percent in January from a month earlier, according to the median estimate of economists. An index of leading indicators by the New York-based Conference Board probably rose for a fourth month, economists predict.

Fiscal Crisis

Signs that the world’s largest economy will keep growing may support demand for Asian goods. North American orders for semiconductor equipment rose 18.5 percent in December from a month earlier, a trade group report showed last month.

Even so, a rebound in Singapore’s shipments may be damped by Europe’s protracted fiscal crisis. Gross domestic product in the 17-nation euro area fell 0.3 percent in the fourth quarter of 2011 from the prior three months and the European Central Bank said this week professional forecasters predict a 0.1 percent contraction this year.

Singapore’s electronics shipments by companies including contract manufacturer Venture Corp. fell 10.9 percent in January from a year earlier, after declining a revised 4.2 percent the previous month.

“The manufacturing sector, and the electronics cluster in particular, have been hit hard by the weakness in final demand from the U.S. and Europe,” said Leif Eskesen, an economist in Singapore at HSBC Holdings Plc. “This is likely to persist. Moreover, slower growth in China and the rest of Asia will also dampen external demand in 2012.”

Japan’s exports probably dropped the most in eight months in January, a Feb. 20 report may show. Shipments fell 9.4 percent last month from a year earlier, after an 8 percent decline in December, economists surveyed by Bloomberg predicted. On the same day, Taiwan may say export orders for January fell 4.8 percent from a year earlier, after a 0.7 percent decline the previous month.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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