Monday, April 18, 2011
Singapore’s Numbers Oddity
Are quick-hit quarterly stats trustworthy?
Flash quarterly GDP statistics are a misleading waste of time that only benefit financial market trading volumes.
That conclusion might easily be reached by reference to Singapore’s flash official data – not to mention China’s. This is not to suggest that the Singapore figures are deliberately distorted or that annual data based on full data collection are significantly inaccurate. But the wild swings in Singapore’ quarterly numbers are at odds with common sense views of what is happening in the real economy.
On April 14, the Singapore Ministry of Trade and Industry issued first quarter 2011 data showing quarter on quarter annualized growth of 23 percent, led by manufacturing growth of 80 percent while the bigger services sector expanded by a relatively modest 8.4 percent. That is simply bizarre.
Singapore’s manufacturing numbers consistently appear all over the place, which must cast doubt on their accuracy and on the accuracy of overall GDP data. Comparing Q1 2011 with Q1 2010, GDP grew by 8.5 percent with manufacturing up by 13.9 percent while services lagged at 7.2 percent and construction rose only 2.6 percent.
But just look at the swings of quarter on quarter growth for manufacturing:
• 1Q10 +170.5 percent
• 2Q10 +79.2 percent
• 3Q10 -48.5 percent
• 4Q10 +0.7 percent
• 1Q11 +80.2 percent
Nor was this unique. The 2008 and 2009 data all show big swings almost as large.
The latest number was, says the Ministry, “driven by the electronics and precision engineering clusters which benefited from a pick-up in business investment in the region.”
But does factory output in Singapore, or in any advanced economy anywhere, really bounce around like that unless there is some extreme event?
A likely partial explanation is in a footnote to the release: the figure is “computed largely from data in the first two months of the quarter and are subject to revision when more comprehensive data becomes available.” But the two previous years data also show big swings even after full data have been compiled. So the explanation is insufficient.
The bigger picture given by the stats is more convincing. In 2010 overall GDP grew by 14.5 percent, which looks high but followed a slight contraction in 2009. The forecast for 2011 is just 4-6 percent. Even so the volatility of the manufacturing output data does raise questions, particularly at a time when manufacturing’s contribution to GDP has, unusually, been rising – from 29 percent in 2008 to 31 percent in 2010 and more so far this year. Meanwhile wages have been lagging output her head by a large margin.
As a result the private consumption share of GDP continues to fall and is now just 38 percent, or only marginally higher than China’s much criticized 36 percent. The suppression of consumption has the same basis as in China – government policy to advance the profits of state enterprises, and foreign investors. Asia Sentinel