Chinese exports grabbed the headlines today showing a decline of 20.6% y/y in February. Bloomberg wrote 'China's export slump deepened' and other comments have been very negative too.
However, the big decline in the y/y rate is to a large extent the result of the monthly jump of 17% m/m in February last year (see chart below). The data is notoriously volatile and the distortion caused by the Chinese New Year makes matters worse.
A significant amount of smoothing is therefore needed to gauge the trend. Looking at the 6-month moving average, the seasonally adjusted level still shows a moderately rising trend since August last yea r. The trend is slowing somewhat but it is hardly an export slump that has deepened.
With the March number we expect a rebound in the y/y rate as exports declined more than 33% m/m in March 2015. It means that if the level of exports is unchanged from February to March this year the y/y rate will jump sharply to around +10%, which would be the highest number since February last year.
The bottom line is that one should be cautious looking at one month's export growth measured on a y/y basis. When looking at the trend the picture is far better than what meets the eye .
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