Back at the end of September, we ran this chart from Morgan Stanley, pointing to the severe slowdown in world trade growth.
Photo: Morgan Stanley
So is the severe downturn over?
Trade data this weekend from China supports the view that things are improving.
SocGen has the summary:
China’s export growth rose further to +11.6%yoy in October from +9.9%yoy in September, beating expectations (Cons. +10%; SG +9%) for a second month. There were two more workdays last month than that in October 2011, which contributed to the headline improvement. But, even if excluding this factor, exports still hold up reasonably well. Export growth to the US and the European Union improved to +9%yoy and – 8.1%yoy in October from +5.5yoy and -10.7%yoy in the previous month, previously. As in September, emerging Asia outperformed the most, with exports to ASEAN economies rising 44%yoy.
Zhiwei Zhang at Nomura sees more reason to expect a GDP pickup in China:
We maintain our view that GDP growth will rebound sharply in Q4 to 8.4% y-o-y. The stronger-than-expected export data in October supports our view. The weak imports data sends a conflicting signal, as there has been a lengthening list of data pointing to strengthening investment and consumption. We believe domestic demand is improving and will likely strengthen further over the rest of 2012 as the policy stance is set to remain loose.
It’s not just China. The US had a nice trade deficit report this past week (one which prompted several economists to sharply ratchet up Q3 GDP forecasts) in part thanks to a nice uptick in exports. As you can see, the YOY change in US exports accelerated for the first time in a few months in September.
US companies of all sorts have been delaying investment spending in recent months. That may be partly due to the Fiscal Cliff, but also because global growth has been so poor, and thus exports have been weak. A pickup in trade would be a nice offset to whatever drag comes out of the cliff negotiations.
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