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Tuesday, January 03, 2012

Singapore, Not So Good

This is an advance estimate for Singapore Q4 GDP:
3 January 2012. The pace of growth of the Singapore economy eased in the fourth quarter of 2011. According to advance estimates1, the economy grew by 3.6 per cent on a year-on-year basis in the fourth quarter of 2011, compared to the 5.9 per cent growth in the third quarter. On a seasonally-adjusted quarter-on-quarter annualised basis, the economy contracted by 4.9 per cent, following the 1.5 per cent gain in the previous quarter.
Singapore tends to expand and contract pretty intensely, but still this result is disappointing. The three quarter trajectory is now -5.9% -> +1.5% -> -4.9%. If you are wondering how you get YoY growth out of that, Q1 was 26.6%. Let's just say there was a state change in the economy. The advance estimate for Q4 manufacturing is -21.7%, which is only marginally better than Q2's -22.3%.

China is clearly still slowing, as are South Korea, Taiwan and probably Japan. Brazil might be coming off the bottom, and India revived, but Europe's Eastern bloc is developing real holes. Markit PMIs. JPM Morgan Global Mfrg PMI shows us pretty much at a standstill. Europe is really not helping.

From here on in it is a battle of attrition, and if fuel prices rise that will pretty much take the thing out. The significance of the flat quarter may be less investment in plants, which cuts into another level of manufacturing and will probably hurt Japan and Germany. It won't help the US either.

It kind of looks like more drag than lift at this point, but we'll have to see what replacement orders go through for holiday sales. Maybe the optimism will do it, but probably not. I have a hunch based on inventories that we are looking at a two-month lift, but overall this seems to be weaker than I thought. The thing about inventories is that they are sensitive, so what looks like controlled inventories can change into overstocking surprisingly quickly in a lot of industries.

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