Weekly Export Risk Outlook


​In the headlines:
- China: Second quarter of deceleration
- Eurozone: Industrial output contracted in May
- Germany: Exports still disappoint
- US: Mostly positive indicators


Figure of the week: +7.5% - China’s y/y Q2 GDP growth

​China: Second quarter of deceleration

In Q2, GDP growth slowed for a second consecutive quarter, to +7.5% y/y from +7.7% y/y in Q1 but it accelerated on a q/q basis, to +1.7% from +1.6% in Q1. Several output indicators suggest economic resilience, with industrial production increasing by +0.7% m/m in June, investment increasing by +1.5% and retail sales of consumer goods increasing by +1.3%. Less encouraging signs, however, came from external trade data as the total values of both exports and imports were down, by -5% m/m in June (-2% in May) and by -9% m/m (-4% in May), respectively. Meanwhile, Finance Minister Lou Jiwei announced that China can withstand a growth slowdown to around +6.5% as part of its new overall strategy that is rebalancing growth towards private consumption, fostering sustainable growth in the long term.

Eurozone: Industrial output contracted in May

In May, industrial production (excluding construction) declined by -0.3% m/m (in line with consensus expectations) after increasing by +0.4% in April. Industrial production contracted in France and Germany (-0.5% m/m and -0.8%, respectively) while increases were registered in southern European countries, including Italy (+0.1% m/m), Spain (+0.3%) and Portugal (+6.1%). Base effects linked to bad weather conditions in May could trigger a rebound in the June data, with industrial production growth increasing by around +1% q/q in Q2. If confirmed, this would be the highest increase since the start of 2011. In this context, EH does not exclude a positive surprise in eurozone Q2 GDP growth, statistics for which will be released on 14 August. Even so, weak business confidence (Eurozone Manufacturing PMI at 48.8 in June) and contraction in credit to non-financial corporations (-5% y/y in May) continue to suggest negative GDP growth in Q2, before a return to positive, but moderate, growth in H2 2013.

Germany: Exports still disappoint

The first provisional data for May released by Destatis, the federal statistical office, suggest that foreign trade continues to be affected by weak external demand. Exports of goods in that month totalled EUR88.2 billion, a decline of -2.4% m/m and -4.8% y/y, while imports of goods amounted to EUR75.2 billion, up +1.7% m/m (-2.6% y/y). In May, there was a particularly steep slump in exports to other eurozone members, down by -9.6% y/y, while deliveries to other EU countries (-2.4%) and to countries outside the EU (-1.6%) declined at a slower rate. In the period January-May, exports totalled EUR454.3 billion, down slightly on a y/y basis, by -0.3%, with exports to eurozone members down markedly, by -3.6% y/y, while shipments to other EU countries (+0.9%) and to non-EU countries (+2.2%) recorded increases over the period.

US: Mostly positive indicators

Recent economic data releases have been generally positive. Manufacturing industrial production increased for the second consecutive month in June, after falling in three of the previous four months. The New York Fed’s regional (Empire State) manufacturing survey also increased, for the second consecutive month, and June auto sales were strong for the third month in a row, rising by a sharp +1.8% m/m. However, retail sales excluding autos and gasoline fell -0.1% m/m. Increased gasoline sales were a result of a rapid price spike, which is expected to continue for several weeks, driven by unrest in the Middle East and by inventory drawdowns. The jump in energy prices pushed consumer and producer prices higher, yet their core rates remain at a relatively subdued rate of +1.6% y/y. Finally among the latest data, the housing market index continued on its steep recovery, improving from 41 in April to 57 in July, which is the highest since January 2006.