China: Export decline deepens while import contraction moderates in May - Nomura

Research Team at Nomura, notes that the Chinese export growth in USD terms declined to -4.1% y-o-y in May from -1.8% in April, largely in line with market expectations (Consensus: -4.0%; Nomura: -2.0%).

Key Quotes

“Providing little indication of external demand gaining traction, consistent with weak May export data from South Korea (-6.0% y-o-y from -11.2% in April) and Taiwan (-9.6% from -6.5%). Import growth in USD terms picked up to -0.4% y-o-y from -10.9% in April, which was much stronger than expected (Consensus: -6.8%; Nomura: -7.7%).

Notably, ordinary import growth rose to 4.2% y-o-y in May, the first positive growth since June 2014; this suggests an improvement in domestic demand and is a reflection of rising commodity prices (crude oil prices up 12.4% m-o-m in May).

As a result, the trade surplus widened to USD50.0bn in May from USD45.5bn in April. The trade data released today, together with leading indicators and high-frequency data, suggest production likely ticked down in May, while the demand side may be more resilient than we expect.”