Something I picked up in the UK data I was looking at last week – a weakening export trend – that I wanted to extend. The following is taken from the CPB worldwide trade data:
Export growth appeared to be picking up globally towards the end of last year but has since declined significantly.
US export growth has also slipped (CPB data to February):
And we can see this again in the monthly data from the Census Bureau (and despite the strong March rebound, the trend is down):
And growth in demand for exports looks to be increasingly dependent on emerging economies:
And looking more closely at monthly export volume growth:
So are we set for a rebound in world trade? Possibly if Europe continues to recover, the US bounces back from sclerotic growth and an awful winter, and emerging economies keep on expanding. But the Eurozone is hardly a bastion of robust growth and much of what we do have could be considered a bounce back from a period of sustained weakness (hardly growth). Likewise emerging markets appear to be slowing (note the recent PMI reports for China, Brazil, India) and there is much more than concern over Chinese debt and its investment led debt fuelled economy.
Chinese manufacturers signalled a further deterioration in overall operating conditions during April. Both output and total new work declined over the month, albeit at weaker rates than those recorded in March. Fewer new orders led firms to cut their staffing levels at a modest
pace, while purchasing activity fell for the third successive month.
Business conditions in the Brazilian goods-producing economy deteriorated in April. Production was lowered in line with falling new orders and companies cut their employee headcounts as a consequence.
Higher levels of new export business were reported in almost all of the nations covered, the exceptions being Greece (a decline) and Austria (no change). Where an increase was reported, this was linked to improving economic conditions in key markets such as the US and Asia.
Unchanged from March’s reading of 51.3, the seasonally adjusted HSBC India Purchasing Managers’ Index™ (PMI™) indicated a further improvement in operating conditions during April. Nonetheless, growth remained modest and historically muted.
Japanese manufacturing firms saw a decline in output for the first time in 14 months in April. Alongside this fall in output was a deterioration in new orders which also decreased for the first time in 14 months. In both cases, firms linked the reductions to the rise in the sales tax.
The BoJ said “sluggishness” in emerging economies was the main reason for Japan’s muted export performance,
Japan’s weakest export growth in a year spurred a wider-than-forecast trade deficit in March, adding to challenges for Prime Minister Shinzo Abe in steering the economy through the aftermath of an April 1 sales-tax rise.
In Asia, however, there was little evidence of strong exports and manufacturing activities which is usually the natural consequence of the economic recovery in the US and the Euro-zone.
China reported its official measure of manufacturing PMI came in at 50.4 in April, up a tick from March but under market forecasts of 50.5. Japan also saw a sharp dip in export shipments in March in terms of volume. Taiwan’s new export orders, a useful leading indicator for the region, contracted by a similar amount. In all, there are hardly signs that the Asian trade cycle is firing up. The lackluster performance of Asian exports has baffled economists and market analysts, who are divided over the reason behind this phenomenon.
Samuel Tombs, UK economist at Capital Economics said the figures showed the economic recovery “remains reliant on growing domestic demand”.
He said the biggest drag on exports was weak demand from the eurozone, the UK’s biggest trading partner, and warned that weakness in the single currency bloc would continue to muffle any pick-up in trade.