Latest Chinese trade data shows that imports from America have tumbled in 2019, as Donald Trump’s tariffs bite
- Eurozone industrial output better than feared
- Chinese-US trade down 11% this year
- Introduction: Chinese exports up 14% in March…
- …but imports keep falling, down 7%
- Chinese credit growth rises as policymakers act
Eurozone factories would have done better in February if Germany hasn’t been such a drag.
On an annual basis, eurozone industrial production was 0.3% lower than in February 2018. But in Germany, it fell by a chunky 2% year-on-year.
“While UK industrial production experienced a short-term boost, due to Brexit stockpiling in February, industrial output across the Eurozone fell. As the global economy cools and the US continues to hold its protectionist stance to trade, the outlook for the sector in Europe looks weak….
The slowdown in Chinese growth, continued escalation of trade tensions with the US and nervousness over Brexit are clearly affecting manufacturers’ order books.
Climate campaigners have also taken out a whole page advert in today’s FT in hopes of raising pressure on HSBC pic.twitter.com/2dQjbYmIvV
Economists have welcomed today’s better-than-feared eurozone production figures (showing a mere 0.2% drop in output in February).
Aila Mihr of Danske Research says it’s more encouraging than the PMI reports (which showed factory output shrinking at its fastest rate in over 6 years)
#Euroarea #industrial #production beats expectations in February, as drag from industry slowly subsides. #PMI has signalled more weakness ahead, but on balance hard data has painted a more optimistic picture of the #economy than survey data lately. pic.twitter.com/qlg5OfGuvj
Are we about to enter the part of the global “mini” cycle in which the disinflation from slowing Chinese growth is still to hit, but the warm comfort of PBoC easing is starting to flow? It could be a real corker!
Protesters have estimated that around 100 people gathered outside of HSBC’s Birmingham offices to take action against what they say is the bank’s “complicity in climate change, war and military action.”
“The groups have vowed to continue campaigning together until HSBC divests fully from the fossil fuel industry and all companies providing military equipment used by Israel and in conflicts across the world.”
HSBC is also holding an AGM today, and taking the opportunity to warn shareholders that the US-China trade war could continue to hurt the global economy this year.
Chairman Mark Tucker says that HSBC hopes that Washington and Beijing can agree a ceasefire (talks have continued between the two side this month, without a deal being reached).
Looking at the current environment, the global economy is much less predictable now than it was a year ago.
Global growth is slowing, largely as a result of weakness in Europe although the economic outlook is also softer in the US and in Asia.
Over in Spain, banking giant Santander is facing some criticism over the botched hiring of top banker Andrea Orcel.
Orcel was initially lured from UBS to become Santander’s next CEO, only for the offer to be withdrawn — apparently because Orcel demanded compensation for the bonuses he’d leave behind at UBS…..
Santander defends the Orcel hiring debacle at its AGM:
Director Bruce Carnegie-Brown says the u-turn on Orcel’s hire (for proving too expensive) demonstrates “the strength of the group’s corporate governance,” showing it works in “best interest” of the bank & shareholders
As a reminder, shareholder advisory firm ISS has urged investors to vote against Carnegie-Brown’s re-election over the failed hire.
ISS says the bank suffered reputational damage could face “further economic damages” after dumping Orcel
But some investors are clearly happy with the decision.
One investor has stood up to thank the board for not hiring Orcel, and is happy the UBS banker is not at today’s AGM. She says the bank’s current leadership is all Santander needs
But a shareholder backlash over the hiring drama wouldn’t be a good look for Carnegie-Brown, who is also chairman of insurance market Lloyd’s of London (that business is facing it’s own scandal – namely allegations of sexual harassment)
A glimmer of hope shines in Europe’s struggling factory sector.
Industrial output across the eurozone fell by 0.2% month-on-month in February, according to Eurostat. That’s not too impressive, but it is rather better than the -0.6% expected.
In the euro area in February 2019, compared with January 2019, production of energy fell by 3.0%, both capital goods and durable consumer goods by 0.4% and intermediate goods by 0.1%, while production of non-durable consumer goods rose by 0.9%.
China’s agricultural sector is being hit hard by an outbreak of swine fever, that could force Beijing to order a mass cull of pigs.
China could face a major food problem because of a virus that’s killing a lot of hogs. Rabobank says Chinese pork production could fall 30% this year. A drop that big would the same as **Europe’s entire annual pork supply**https://t.co/Ay6lZFo7wr | @irenegperez pic.twitter.com/UJkUuBpYep
Tomorrow’s @Daily_Star front page
– Save our bacon! Butties at risk as China grabs Brit pork
– Dawn Neesom says racist ducks furore is ‘quackers’
– #Corrie Amanda is saved by 999 crew #frontpages #tomorrowspaperstoday pic.twitter.com/e8OpuUSt0s
The pick-up in Chinese credit growth is an encouraging sign for the global economy, says Ralf Preusser, global head of rates research at Merrill Lynch.
We’ve now had three months of good credit growth figures…. that’s finally an indication that the policy measures being taken are starting to bite.
That should give us hope in Europe too.
The latest Chinese money supply figures are also out today, and they show a sharp increase in credit availability as Beijing tried to stimulate growth.
Financial institutions offered 1.69 trillion yuan of new loans in March, more than the 1.25 trillion yuan predicted by economists.
#China March new bank loans, credit and M2 all bounced back more strongly than expected. Consistent with PBOC easing and pointing to a pick up in economic growth.
VERY Punchy Chinese credit data. Aggregate Financing 2.9trn (1,9 fcst), New Loans 1.7trn (1.3 fcst)
WoW China basically threw about 9% of GDP of total social financing at the economy in Q1 2019
TSF rose 1690 in March after a massive Jan+Feb = ~9% of GDP injection in Q21 2019;
M2 rose to 8.6% YoY from 8%; New credit was massive too.
Now u know why Chinese equities rose pic.twitter.com/vDJpqR5zfA
Digging into the Chinese trade data, you can see that soybean imports have slumped by over 14% this year.
Beijing slapped a 25% tariff on US-grown soybeans last year, in retaliation for president Trump’s tariffs on Chinese goods. That has hurt American farmers badly, as Chinese companies turned to rival suppliers such as Brazil.
In Q1, China’s imports of major bulk commodities such as crude oil and natural gas grew, while imports of iron ore, coal and soybeans dropped. Imports of soybeans went down 14.4 percent to 16.75 million tons. pic.twitter.com/GTqxRdcKAa
In another sign of economic weakness, car sales in China fell by 5.2% year-on-year in March.
That’s follows a 13.8% slide in February, and means auto demand has been dropping since last summer.
#China‘s #car sales fell 5.2% in March, marking the 9th straight month of decline in the world’s largest auto market. energy vehicle (NEV) sales however, which include #ElectricVehicles, soared by 85.4%… #Reuters #OOTT
Customs spokesman Li Kuiwen has told a news conference that China expects to see mild growth in imports and exports in the current quarter (April to June), Reuters reports.
China’s total imports have now fallen for four months in a row, points out the Financial Times, a clear sign of economic stress.
Julian Evans-Pritchard, senior China economist for Capital Economics cautioned that the turnround [in March exports] was more likely a result of the fading effects of the lunar new year holiday, which distorts official data in January and February.
He added that exports were yet to recover from a sharp slowdown at the end of 2018.
Several experts are concerned by the news that Chinese imports fell again in March, even though the Lunar New Year disruption should have ended.
The tit-for-tat tariffs imposed on US goods will be a factor, of course, but it may also indicate the Chinese domestic economy is struggling.
China exports grew 14.2% in March, but imports shrank *again*, 7.6% fall, shows weak demand in China @scmpeconomy
China exports rose 14.2% YoY in USD terms but imports WORSENED to -7.6% YoY from -5.2% & that is really bad news because it means domestic demand is weak.
Here is the data in time series in a chart. Look at the orange line & look at the acceleration of contraction for imports in March – very bad news for not just China domestic demand but also EXPORTERS TO CHINA (SK, Japan, etc).
In Q1 2019, exports grew 0.9% & imports -4.4% pic.twitter.com/DsgXjK87Y5
#China‘s exports rebounded sharply in March, rising 14.2% YoY, pointing to resilience in global growth, but imports fell 7.6% YoY suggesting sluggish domestic demand. #mixedbag pic.twitter.com/rwIvyfQolN
Today’s trade data also suggests America is losing the trade war with China.
China’s total trade with America has slumped by 11% in the first three months of this year, the Customs department reports.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
China’s economy is under the microscope today as the world’s second largest economy reports another fall in imports, and a strong bounce-back in exports.
Reuters: #China March trade data published by Customs, in USD terms
Exports: +14.2 pct y/y (+7.3 pct Reuters poll)
Imports: -7.6 pct y/t (-1.3 pct Reuters poll)
Trade balance (based on raw #s given by Customs): +32.64 bln (+$7.05 bln poll)
China March international trade (exp, prior)
Surplus $32.64b ($7.05b, $4.08b)
Exports +14.2% YY (+7.3%, -20.8%)
Imports -7.6% YY (-1.3%, -5.2%) pic.twitter.com/qf8BM0yFgu