Quick Data Update: Trade data improves in June. The improvement is much better than the headline numbers imply.

China trade activity improved significantly in June, in a positive sign for growth prospects in H2 2015.  Exports rose 2.1% from last year.  2.1% may not seem like a big number, but given the yuan's rally vs. major trading partners (up 19% against EUR, and up 18% vs. JPY), it is a very solid number.  Rising exports after a massive currency appreciation is a pretty big feat.

Imports dropped 6.7% from last year on a value basis, much better than the 18% annual decline in May.  But, factoring in the drop in commodity prices over the last year, import volume was probably up around 3% on the year.  Much of the improved import number was due to the reduction in consumer goods tariffs in May.  Commodity demand was mixed.

Things to note about China's trade numbers:

  • Exports to the US rose 12% from last year.
  • Exports to Europe declined 3% from last year.
  • commodity import demand was mixed: Iron ore 0% change from last year, copper down 2%, but crude oil imports surged 27% from last year. Coal imports dropped 34% from last year.
  • Most of the export gains went to countries along the Asian manufacturing supply chain, in a positive sign for Asian growth prospects.
  • Imports from commodity countries continued to drop, primarily on price declines.
  • Import tariffs were cut for a number of consumer goods in May, adding to June import demand.