SINGAPORE's non-oil domestic exports in July held up well against expectations - and in contrast to the poor showing of other major exporters in Asia.
But the talk of a technical recession lingers - though less strongly - despite the creditable export performance which provides a key reading of Singapore's economic health.
Last month's non-oil domestic export (NODX) rose 5.8 per cent from a year earlier, according to the government's trade promotion agency International Enterprise Singapore. This beats the 5.0 per cent growth which the market expects.
And it outperforms China, which posted an anaemic 4.7 per cent growth in July; and Taiwan and South Korea, which saw exports tumble 12 per cent and 8.8 per cent respectively in the same month.
Still, July's NODX year-on-year growth was lower than June's figure which IE Singapore has revised from 6.8 per cent to 6.6 per cent.
Seen from a month earlier, the NODX fell - though less than expected - by a seasonally adjusted 3.6 per cent in July. In contrast, June's NODX was 6.7 per cent higher than in May.
Estimating headline July NODX to be 0.2 per cent below the second quarter's (Q2's) levels, Citigroup economist Kit Wei Zheng says in a brief report that the latest trade numbers, along with the pullback in the Composite Leading Indicator, still suggest "some risk of (a) mild technical recession" in Q3.
"July's industrial production figures out next week will give a more accurate indication of the GDP trajectory," he says.
With gross domestic product in Q2 dipping by a seasonally adjusted, annualised 0.7 per cent from Q1, the government has adjusted its economic growth forecast for the year from 1-3 per cent to 1.5-2.5 per cent.
IE Singapore has similiary followed suit by narrowing its full-year growth projection for trade and NODX from 3-5 per cent to 4-5 per cent.
Chua Hak Bin at Bank of America Merrill Lynch sees some softness ahead, especially in electronics shipments. But he stands by his bank's forecast that Singapore "will narrowly escape a technical recession".
IE Singapore says July's NODX rose on the back of high electronic and non-electronic domestic exports. Electronic shipment rose 2.0 per cent, extending the 1.6 per cent gain in June.
Non-electronics export growth, which is highly volatile because of its pharmaceutical component, eased from 9.2 per cent in the previous month to 7.9 per cent in July. Pharmaceutial domestic shipments inched up just 1.3 per cent, after a 24 per cent jump in June.
Despite the improvement in electronic domestic exports, UOB's Alvin Liew, who maintains a "cautious growth expectation", is unsure that the turnaround in the electronic sector can be sustained.
"The risk remains that the sector is still susceptible to a negative turnaround," he says.
ANZ's Vincent Conti notes that electronic items are among the exports most sensitive to global economic cycles, but he believes the NODX's growth momentum is turning around.
"(The) underlying momentum in Singapore's NODX appears to have bottomed out," Mr Conti says in a brief report. He points to the three-month moving average year-on-year indicator, which shows that the sharp fall in momentum has reversed since June.
Yet Mr Conti is aware that there are significant downside risks to his view.
"Should the European crisis spin out of control, or if the recovery in the US and China is delayed or derailed, the Singapore economy will suffer accordingly," he says.
Singapore's NODX shipments to the EU dipped 1.5 per cent last month, after a 17 per cent jump in June. Shipments to the US fell 15.6 per cent, following a 2.2 per cent dip in the previous month.
But shipments to China increased 8.3 per cent in July, reversing the 3.4 per cent drop in June. Hong Kong (up 53 per cent), Taiwan (up 31 per cent) and South Korea (up 25 per cent) were the top three contributors to the NODX expansion last month.