Non-oil domestic exports may have contracted 7% in January 2011

The Lunar New Year in early February may have caused a pullback in export sales in January.

According to DBS, while year on year growth is likely to record a 10.5% rise, better than the increase of 9.3% in December, it should be accompanied by a month on month decline of about 7% due to the festive season effect. Specifically, the Lunar New Year in early February is likely to cause a pullback in export sales in January. This is because manufacturing plants in China, key buyers of Singapore manufactured components and intermediate products typically wind down their production ahead of the Chinese festive season.

In fact, such seasonal effect usually created volatilities in export and production figures in the first three months of the year. Thus, it is always difficult to gauge the full year performance of the economy based on the economic numbers from the first few months of every year. Moreover, this festive season will only get stronger going forward as China becomes an even more important NODX market for Singapore. In fact, China is now "officially" Singapore's largest single country NODX market (excluding the EU). Total NODX vlue to China recorded SGD 19.3 billion and accounted for 11.1% of total NODX share in 2010. And this excludes those China bound exports that were re exported via Hong Kong. Comparatively, the total NODX value to the US was lower, at SGD 19 billion and accounted for 11% of the total NODX.