Skip to comments.China's Exports "Surprisingly" Drop
Posted on 10/14/2013 5:18:50 AM PDT by Kaslin
Economists expected a 6% rise in Chinese exports. Instead, exports fell 0.3%. Please consider China's September export growth in surprise slide.
China's export growth fizzled in September to post a surprise fall as sales to Southeast Asia tumbled, data showed, a disappointing break to a recent run of indicators that had signaled its economy gaining strength.
China's exports dropped 0.3 percent in September from a year earlier, the Customs Administration said on Saturday, sharply confounding market expectations for a rise of 6 percent, and marking the worst performance in three months.
Imports fared better, rising 7.4 percent in September from a year ago, better than forecasts for a 7 percent increase, shrinking China's monthly trade surplus to $15.2 billion.
Analysts said weak exports underscored worries about flagging global demand, which may crumble further in coming months - especially in emerging markets - when tighter U.S. monetary policy pushes investors away from developing economies.
Indeed, the data showed Chinese exports to Southeast Asia, China's fastest-growing export market in the past year, dived to a 17-month low in September. Capital outflows from the region on bets that the U.S. central bank will cut its bond purchases had hit demand, said Louis Kuijs, an economist at RBS in Hong Kong.
"Looking ahead, export data may be quite weak in the coming months," Kuijs said, adding that financial turmoil in several emerging markets had dragged on global demand.
For reasons discussed many times on this blog, the news is hardly surprising. Moreover, with exports down and imports up, China's GDP is going to "surprise" economists on the downside as well.
For the real story on Chinese growth and why it will not be as strong as most analysts expect, here is some additional reading.
China’s exports to us are mostly durable goods. When times are tight, I still need to buy food, but I’ll likely defer buying a new toaster oven unless the old one is actually broken.
It doesn’t matter how cheaply something is built if there is nobody to buy it. Unless and until the US gets its budget under control and stops spending like the Wal-Mart EBT people, there will be no recovery. You’d think China would be the first to see this and would be screaming.
Perhaps Chinese companies often put all their efforts into making prototypes to spec, but once the production agreement is activated, they ship crap made out of whatever material they have laying around, and people are getting wise to it.
While this chart referenced from the source article, shows slowing growth, it is still a trend in growth.
What exactly is the Baltic Dry index, for those of us who don’t know?
We are in for a WORLDWIDE helluva ride, folks. Won’t be surprised if the nukes fly.
Military movement? Because it sure ain’t consumer product.
On October 11, 2013, the Baltic Dry Index fell to 1,985 points, down 26 points (1.29%) against the level of October 10.
BDI is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain. Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, the index is also seen as an efficient economic indicator of future economic growth and production.
On 20 May 2008, the index reached its record high level since its introduction in 1985, reaching 11,793 points. On 3 February 2012, the index had dropped 647 points, the lowest since 1986.
So my guess is (and I am hardly an economist) we will see deflation in durable goods and inflation in food. A toaster will be four bucks and a ham sandwich $72?
Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).
The supply of cargo ships is generally both tight and inelasticit takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in deserts. So, marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly. e.g. "if you have 100 ships competing for 99 cargoes, rates go down, whereas if you've 99 ships competing for 100 cargoes, rates go up. In other words, small fleet changes and logistical matters can crash rates..."
The index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as building materials, coal, metallic ores, and grains. Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food; the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator because it predicts future economic activity.
Another index, the HARPEX, focuses on containers freight. It provides an insight on the transport of a much wider base of commercial goods than commodities alone. HARPEX is regarded as a Current-Activity Indicator, because it measures and charts the changes in freight rates for 'container ships.' Container ships typically carry a wide variety of finished goods from a multitude of sellers. These are factory output goods headed for retail markets, at the other end of the supply chain.
Other leading economic indicatorswhich serve as the foundation of important political and economic decisionsare often measured to serve narrow interests, and subjected to adjustments or revisions. Payroll or employment numbers are often estimates; consumer confidence appears to measure nothing more than sentiment, often with no link to actual consumer behavior; gross national product figures are consistently revised, and so forth. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. "People don't book freighters unless they have cargo to move."
Is that number 11,793 a valid number?
If so that number is all over the place, no?
Based on what has been said about the Baltic Dry Index, perhaps some cargo ships have been taken out of service for some reason, increasing demand for them, even if the cargo to be moved remains at fixed or slightly reduced amounts.
When asked to offer his analysis regarding this unexpected drop in exports, Chinese President Hu Jintao told the press:”Sum Ting Wong, Wi Tu Lo.”