China + US report disappointing trade balance figures over the past two months

China’s exports slumped 7.5% y-o-y to USD 284 bn in May, much higher than the forecasted 1.8% drop, further fuelling doubts about China’s post-pandemic recovery, according to Bloomberg. Exports to key markets in the US, Japan, Southeast Asia, France, and Italy saw double-digit declines, while imports also dropped 4.5% when compared to the same period last year to settle at USD 218 bn. Booming exports earlier in the year had underpinned hopes that China was undergoing a robust recovery after dropping pandemic-related shutdowns, but recent trade, manufacturing, and domestic sales figures point to a weakening in China’s recovery, Bloomberg said. The latest round of numbers make it more likely that supportive policies, including an interest rate cut, will follow, Bloomberg analysts say.

The US didn’t do any better in April, with its trade deficit widening to USD 74.6 bn, itslargest in six months, as exports saw their biggest drop since the start of the pandemic and imports rallied, according to US Department of Commerce data cited by Bloomberg. The value of exports in April fell 3.6% to USD 249 bn, the largest drop since April 2020, on the back of a drop in outbound shipments of industrial supplies, capital goods, and consumer merchandise. Imports rose by 1.5% on a monthly basis to settle at USD 323.6 bn, with motor vehicles and parts, industrial supplies, cellphones, and other household goods all seeing increases. The rise in imports indicates an increased reliance of foreign goods, Bloomberg wrote.