China: April trade data signals softening momentum – ANZ

Betty Rui Wang, Senior China Economist at ANZ, explains that China’s export growth in April was half the pace in March, indicating a softening momentum in Q2.

Key Quotes

“April’s export growth slowed to 8% y/y after surging 16% y/y in March, in line with the new export orders sub-index which dropped to 50.6 in April after having improved for three consecutive months. The US ISM manufacturing PMI also declined to 54.8 in April from 57.2 in March. We think these may signal a softening momentum in China’s export growth in Q2 although the pipeline of electronic products in the global supply chain is still likely to keep China’s export outlook stable through 2017.”     

“The slowdown in imports growth in April mirrors the softening commodity price growth in the month. Year-on-year growth of global oil prices and domestic iron ore prices slowed sharply compared with previous months, playing a key role in dragging import growth in April lower. In terms of volume, imports iron ore declined 2.3% y/y after three-months’ positive growth.”

“Commodity prices, China’s iron ore inventory pile-up, and credit tightening may weigh on China’s import outlook in the near term. Particularly, China’s iron ore inventory appears to have peaked of late, which is likely to affect the country’s commodity imports in the near term.”