China’s October exports to US fall over 25% on levy stress

China’s exports unexpectedly contracted in October as global demand failed to offset a deepening decline in shipments to the United States, dealing a blow to an economy already slowing due to weak consumer spending and investment at home.

Exports fell 1.1% year-on-year, falling for the first time in eight months, according to official data released on Friday. Shipments to all countries outside the US increased 3.1%; this was not enough to offset the more than 25% drop to America.

“If export strength cannot be sustained, China’s growth could face a ‘triple whammy’ from a prolonged contraction in the property sector and weakening private consumption and exports,” Barclays economists wrote in a note. he said.
China’s exports have been resilient so far as other destinations have offset declines in shipments across the Pacific Ocean. Sales abroad had been rising every month since February, when activity slowed due to the Lunar New Year holiday.

However, October marked a break in the growth trend driven by Chinese companies’ search for new markets. A number of trade indicators began to decline after record figures seen in previous months, with Shanghai port processing the fewest containers since April.

With the US cutting tariffs on Chinese goods by 10% starting next Monday, it is possible that trade between the world’s two largest economies could see a recovery by the end of the year. But the impact may be limited because tariffs on Chinese goods are still higher than on products from countries such as Vietnam. If the slowdown in demand from the rest of the world continues, this could negatively impact shipments and the economy in general in the last two months of the year. Last quarter, China’s economic growth fell to its weakest pace in the last year, even though exports increased rapidly. Weakness appeared widespread in October, when shipments to the European Union rose 1%, the slowest growth since February’s decline. Exports to some other major markets fell, with sales falling by double digits in South Korea, Russia and Canada.

U.S. Consumers See Worse Job Market and Falling Inflation
Americans’ perceptions of the job market worsened in October while inflation expectations also eased, according to a monthly survey from the Federal Reserve Bank of New York.

Survey results released Friday showed unemployment expectations rising for a third straight month as consumers gave an average 43% chance (the highest since April) that the U.S. unemployment rate could be higher a year later. Consumer price increase expectations for next year decreased from 3.4% in September to 3.2% in October.