China’s April trade data signals softening momentum

May 8, 2017

BEIJING - China’s export growth in April was half the pace shown in March, indicating softening momentum in the second quarter. 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.

ANZ Bank reports that the US ISM manufacturing PMI also declined to 54.8 in April from 57.2 in March. “We think this 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 bank says.    
It says the slowdown in imports growth in April mirrors 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.
ANZ believes commodity prices, China’s iron ore inventory pile-up, and credit tightening could 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,” ANZ says. (ATI).