Singapore Q2 GDP data released last night registered a -3.7% year-over-year growth rate, stronger than economist consensus by 170 basis points.
The headline data was largely driven by resuming construction projects, an uptick in Pharmaceutical sector activity and inventory restocking in the electronics manufacturing - a clear sign that domestic business confidence is improving as investments increase and stimulus programs in neighboring countries begin to bear fruit.
When this data is taken to a higher vantage point in the context of Singapore's regional role -a highly developed entrepot economy in a strategically central position in the Pacific rim supply chain, the signal sent is unmistakable: Chinese demand driven trade continued to strengthen in June, and this sequential increase confirms that ASEAN and other smaller inputs into the matrix have felt that strength as much as the primary commodity and durable goods producing economies have.
We remain long Chinese demand via CAF as we continue to see the Ox pushing forward. China can't carry the whole world on its back indefinitely, and we have yet to see real confirmation of broadening demand there, so at some point this surge will likely abate. For the time being however the data still supports only one conclusion.