The US economic calendar is bare today save for a three-year auction but China released import data earlier today and it showed growth of just 0.5% y/y compared to 2.0% expected. That’s a sharp slowdown from the +7.2% y/y rise in July.
The global manufacturing cycle starts in China and orders for imports are based on how factories view futures demand. Soft imports highlight a tepid view and also underscores poor domestic demand.
The good news is that exports grew at the fastest pace since March of last year. That signals that current demand is still fine (or was in July). What’s notable is that the breakdown shows a 12.2% rise in exports to the US while Europe was down 5.3%.
On the imports side, Australian intake was down 14.3% partly due to a drop in raw materials prices but also reflecting less of an appetite for resources. Iron ore imports were down 4.73% y/y.
With this data set, China’s trade surplus was $91B compared to $82B expected and that will be seen in better growth data. But Nomura worries that will delay fiscal and monetary support.
“The continued strong run of exports may actually delay near-term policy support, and we continue to expect bolder measures to be released in Q4,” Nomura analysts said in a note.