Imports drop as tariff wars bite
Today’s release of China’s trade data for June showed imports starting to feel the effect of tariff implementation, while exports managed a small increase. Imports rose a mere 14.1% in dollar terms, below the estimate of 20.8% and a severe drop from May’s 26.0% advance. Exports held up, recording 13.8% growth compared with a forecast of 10.0% and the previous month’s 12.6% gain. The trade surplus ballooned to $41.6 billion from $24.9 billion on the lower import bill.
At the same time, data for the first six months of the year were also released. Exports to the US rose 13.6% in dollar terms while imports climbed 11.8%. Commenting after the release, China Customs official Huang Song Ping said the H1 growth sets a solid foundation for the full year, though there are downward risks in H2.
China Data Calendar July 13
US economy “in a good place”
In a radio interview yesterday, Fed Chairman Jerome Powell said he believes the US economy remains in a “good place” with recent tax cuts and spending programs likely to boost GDP for the next three years, adding that it is unclear how the trade disputes will end.
Note: Powell will appear before Congress next week for his semiannual Humphrey Hawkins testimony.
EU growth forecast scaled back
Yesterday the European Commission cut its forecast for Euro-zone economic growth this year to 2.1% from 2.3% previously due to ongoing trade tensions with the US and rising oil prices. It singled out Italy as one to suffer most, with its growth forecast slashed to just 1.3%, the lowest among the 28-member bloc, citing ”re-emerging concerns or uncertainty about economic policies”. Germany and France, the two largest economies in the zone, are also expected to lose steam with forecasts of 1.9% and 1.7% respectively. This compares with 2.2% both economies grew by last year.
Fed’s Monetary Policy Report is the data highlight
The week finishes with a relatively nondescript data calendar. BOE’s Cunliffe, who sits on the dovish side of the fence, is scheduled to speak and it’s doubtful he will say anything different to his stance. US export and import prices feature in the US session while the Fed’s monetary policy report comes later. FOMC member Bostic closes off the week ahead of the weekly Baker Hughes oil rig count.
You can access the full data calendar on MarketPulse at https://www.marketpulse.com/economic-events/
Have a great weekend.