Brace yourselves for a 2.3% shrinkage in Singapore's NODX growth

Is this just a blip?

According to DBS, a pullback in exports is expected in January. Headline non-oil domestic export (NODX) growth due next Monday morning is likely to register a contraction of 2.3% YoY. 

In sequential terms, a dip of about 2-3% MoM sa should not come as a surprise.

Here's more from DBS:

While it looks peculiar that NODX will worsen despite the strong showing in Jan13 PMI numbers and improving global economic conditions, it pays to note that this month’s decline has more to do with short term seasonal factor rather than underlying fundamentals.

Plainly, the Chinese New Year lull is expected to suppress export performance. This will be manifested in the hard NODX numbers. But the pick-up in PMIs (50.5 in Jan, up from 49.7 in Dec) reflects the general optimism for manufacturers as they look beyond the near term seasonal lull.

That’s sentiment driven and more forward looking.

So, if the NODX figures do slip, take it as nothing more than a downside blip. It doesn’t imply a worsening in global demand or impending risk ahead. Instead, look to a fairly healthy export performance in the coming months.