China's exports plunge by 7.5% in May, far more than expected
- Exports fell 7.5% in May from a year ago, far worse than the 0.4% decline predicted by a Reuters poll.
- Imports for May dropped by 4.5% from a year ago — less than the 8% plunge forecast by Reuters.
- The decline was so sharp that export volumes are below their levels at the start of the year, after accounting for seasonality and changes in export prices, Julian Evans-Pritchard, head of China Economics, at Capital Economics, said in a note.
BEIJING — China's exports fell in May for the first time since February, adding to concerns that growth in the world's second-largest economy could be faltering.
Exports fell 7.5% year-on-year to $283.5 billion, customs data showed Wednesday, far worse than the 0.4% decline predicted by a Reuters poll.
The decline was so sharp that export volumes came in below their levels at the start of the year, after accounting for seasonality and changes in export prices, Julian Evans-Pritchard, head of China Economics at Capital Economics, said in a note.
"This points to subdued global demand for Chinese goods," he said.
In April, China's exports beat expectations slightly with 8.5% year-on-year growth. However, the disappointing export figures for May indicate that the longer-term trend is down, said Hao Hong, chief economist at Grow Investment Group.
China won't be able depend on trade to boost its economy for "another six months, for sure," he said, noting a drag from lackluster U.S. demand, where inflation — and interest rates — remain high.
Customs data released Wednesday showed the dollar value of China exports to the U.S. slumped 15.1% from the January to May period compared to a year ago, while exports to the European Union declined 4.9% in the same period. China exports to ASEAN, however, rose 8.1% in U.S. dollar terms from January to May, compared to a year ago.
Imports stabilize
Imports for May dropped by 4.5% from a year ago to $217.69 billion — less than the 8% plunge forecast by Reuters. China's monthly imports have declined on a year-on-year basis since late last year.
Other analysis of the data showed signs of recovery in domestic demand.
Capital Economics' Evans-Pritchard estimated that import volumes for May reached an 18-month high, after accounting for a lower comparison base and price changes.
He expects imports "will continue to recover over the coming quarters as the boost from reopening continues to feed through."
China is set to release inflation data on Friday.
— CNBC's Jihye Lee contributed to this report.
Correction: This story has been updated to accurately reflect that data cited for China's exports to the U.S., EU and ASEAN was for the January to May period. An earlier version of the story misstated the time period.