China's Exports Miss Forecasts as Lone Bright Spot Fades

• China's export growth slowed sharply in September while imports also unexpectedly decelerated, undershooting forecasts by big margins and suggesting manufacturers are slashing prices to move inventory ahead of tariffs from several trade partners. Export momentum had been one bright spot for the Chinese economy, which has struggled to gain traction due to weak domestic demand and a property market debt crisis, adding to the urgency for stronger stimulus.
• Outbound shipments from China – the world's second-largest economy – grew 2.4% year-on-year last month, the slowest pace since April, customs data showed on Monday, missing a forecasted 6.0% increase in a Reuters poll of economists and significantly below the 8.7% rise recorded in August.
• Imports edged up 0.3%, missing expectations for a 0.9% rise and softer than the 0.5% growth previously. The weak data does not bode well for exports in coming months as just under a third of China's purchases are parts for re-export, particularly in the electronics sector.
• China's overall trade surplus narrowed to $81.71 billion in September from $91.02 billion in August and missed a forecast of $89.80 billion. Manufacturing activity shrank sharply in September, according to a recent factory owners' confidence survey, with new export orders falling to their worst in seven months.
• Analysts have attributed previous months' strong export performance to factory owners slashing prices to find buyers. "Export growth in the fourth quarter is still likely to remain positive, but in the context of slowing external demand, the downside risk of exports is large," said Wang Qing, chief macro analyst at Oriental Jincheng, adding that manufacturing activity was way below the average for the last 10 years.

(Source: Reuters)