May export growth probably lowest in eighteen months

June 17, 2007
Singapore Democrats

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Bloomberg
16 Jun 07

Singapore’s exports probably gained in May at near the slowest pace in 18 months, suggesting electronics manufacturers are still struggling to surmount the worst slump in shipments in five years.

Non-oil domestic exports rose 1.9 per cent from a year ago after unexpectedly dropping 0.4 per cent in April, according to the median forecast of 10 economists in a Bloomberg survey. The trade report is due at 1pm in Singapore on June 18.

Weaker US demand is hurting Asian export-dependent economies, which are almost twice as reliant on overseas sales as the rest of the world. Prime Minister Lee Hsien Loong’s government expects growth to ease in 2007 as the global economic slowdown curbs orders for Singapore-made chips and disk drives.

“Electronics exports won’t be going into an expansionary phase anytime soon,” said Vishnu Varathan, an economist at Forecast Singapore. “Companies are waiting for inventory levels to diminish further before replenishing them.”

The Singapore Institute of Purchasing and Materials Management on June 5 said manufacturers received fewer orders for goods destined for overseas markets in May, resulting in a slowdown in production. Growth in electronic export orders also eased, the group said.

Weaker overseas sales of electronics, which have dropped six times in the seven months ended April, are hurting sales for companies such as Creative Technology Ltd. The decline in exports is the worst since a 17-month slump ending June 2002.

Creative, whose music players compete with Apple Inc’s iPods, reported its fourth loss in five quarters last month after sales in the US and Asia were lower than expected.

Chartered Semiconductor Manufacturing Ltd, a maker of chips for Microsoft Corp’s Xbox 360 game console, forecast sales and profit to fall this quarter as personal-computer customers scale back orders to trim their stockpiles.

Japan’s chip-making equipment book-to-bill ratio, fell to 0.94 in April from 1.03 in March, according to the Semiconductor Equipment Association of Japan last month. Sales outpaced orders for the first time in 13 months, the group said.

Higher exports of pharmaceuticals may offset easing electronic shipments. Singapore’s industrial production grew at the fastest pace in nine months in April after pharmaceuticals output more than doubled from a year earlier