The University of Michigan's final November consumer sentiment index was a marginal improvement over the preliminary numbers announced earlier. The index rose to 93.7 in the final reading from 93.5 in the preliminary reading. The current conditions index rose to 102.5 in November from October's final reading of 99.9 and the expectation index also rose further to 88.1 in November from 83 in October.

The better consumer mood was the result of markedly faster US growth in the third quarter and improvement in the labour market. While this may not necessarily translate into stronger consumer spending, it does at least ensure that consumer spending should not fall below current levels. Continued consumer spending plus a resurgence in business spending should keep the US growth momentum going into 2004. With growth of 3-4% annualised expected in 4Q03 and into 2004, we believe this should be a boost to Singapore's non-oil domestic exports (NODX) in the months ahead. In such an environment, we believe that Singapore can achieve at least 0.8% yoy GDP growth for 2003 and as the global economic climate improves further, better growth of 5.3% yoy for 2004.

Leslie Tang
UOB Kay Hian Research