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MERCHANDISE EXPORTS are expected to have improved slightly last August, driven by the beginnings of a seasonal boost particularly for electronics in the last few months of the year, DBS Bank Ltd. said in its latest “Daily Breakfast Spread” note, dated Oct. 10.
The National Statistics Office (NSO) is scheduled to report today merchandise export data for August.
“Seasonal factors have historically provided a boost to electronics exports from August to December and that should start to show up in upcoming trade figures,” DBS said.
It noted further that non-electronics shipments, which had grown 30% in the seven months to July, should also provide continued support for overall merchandise exports.
These factors likely resulted in merchandise exports rising by a monthly 6.1% and contracting annually by a smaller 1.6% in August, the bank said.
NSO data show merchandise exports contracting annually by 1.7% in July, 9.4% in June and 3.1% in May, dragged by drops of 21.3% and 23.9% in July and June, respectively, for electronics, which typically make up about half of total shipments.
On a monthly basis, merchandise exports grew 7.3% in July from a nearly flat 0.5% in June, though increase in electronics shipments slowed to 2.0% from 17.2% in those same periods.
Total merchandise export sales grew 3.3% to $29.186 billion in the seven months to July from $28.246 billion in the same period last year.
Support just temporary
The latest tally had prompted the Trade department to estimate 6%-8% merchandise export growth for the whole year against a 10% “fighting target,” and electronics industry officials to project a contraction of at least 5% in their shipments this year.
DBS warned that any support for growth in exports towards the end of the year would be temporary and that external developments bare negative prospects further on.
It particularly cited a continued decline in book-to-bill ratio in North America -- or the ratio of orders to actual shipments. In this indicator, a ratio of more than 1 reflects strong demand since more orders were received than filled, while a ratio of less than 1 reflects weak demand.
“The global overhang for electronics manufactures is still apparent, with the latest North America Semiconductor book-to-bill ratio dipping lower to 0.8 in August (the fourth consecutive month of decline),” DBS noted.
“As such, there is little scope for a meaningful pickup in electronics export over the medium term.” -- Business World Online / October 10, 2011
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