Deconstructing China’s trade data

The General Administration of Custom of China published the latest set of trade figures yesterday.  First, on a month-on-month basis, both exports and imports fell.  Exports fell by 7.2% in October on a non-seasonally adjusted basis, or –1.4% on a seasonally adjusted basis, while imports fell by 9.5% on a non-seasonally adjusted basis, or +3.2% on a seasonally adjusted basis. 

On an year-on-year basis, exports increased by 15.9% vs. consensus of 16.1%, while imports increased by 28.7% vs. consensus of 22.2%.  The trade surplus widened from US$14.4 billion to US$17.03 billion in October, well below expectations of US$25.75 billion.

Not surprisingly, as the European debt crisis intensifies, export growth to the US slowed from 9.8% yoy in September to 7.5% yoy in October. And new orders were uninspiring as well.

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Source: General Administration of Customs

This is unimpressive data from China.  Even though the trade balance bounced back slightly, exports have fallen by 7.2% before seasonal adjustment, and 1.4% with seasonal adjustment.  The latest set of data once again reminds us of the weak global outlook, particularly in Europe.  The good news is that imports are holding up well, so it appears that domestic demand is relatively intact.  Whether it can still hold up well in the coming months and quarters will depend on how much slower the economy can get.

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Comments

  1. As I commented with last months numbers, the seasonal swings are so large with China’s trade that even citing non seasonally adjusted numbers is pointless. Additionally because of the large variation I’d even be cautious of the seasonal adjustments to the data.

    That comment drew argument last month but I make it again merely to point out that if you are going to draw conclusions about some data that is being presented you need to be aware of the pitfalls.

    Notwithstanding that we need to be cautious even of the seasonally adjusted data, -1.4% and +3.2% for exports and imports hardly seem to warrant the “unimpressive” description.

    A better guide of performance is obviously the YOY data since any seasonal ambiguity is removed. Here we see +15.9% and +28.7% for export and imports. I’m not sure why these numbers would be considered “unimpressive.”

    Last month I asked if an entity fails to meet an analysts forecast is it the entity that has underperformed or the analyst? With this months data the YOY exports came in pretty close to analysts predictions so doubtful they could be disappointed or need to explain themselves to their bosses. Imports exceed forecasts. Is that good?

    Overall the data simply doesn’t justify a conclusion of “unimpressive” I’d save that word for the analysis.