If you wanted to figure out where Asian exports were headed, US manufacturing data used to be a logical place to start. Not anymore.
The US is buying more goods from neighbors such as Mexico instead of Asia, and the shale-gas boom has kept demand within the country, said Christy Tan, head of markets strategy for Asia at National Australia Bank Ltd.
The recovery in the world’s biggest economy is also more services-oriented this time, and some of the increase in wealth and employment is being used to pay off debt rather than on consumption, she said.
“Asia’s definitely lagging behind the US recovery, and so if you’re talking about an export-led recovery, I’m afraid that’s not happening in Asia,” Tan said. “It’s the structural shift in terms of the US recovery where demand is now more domestic oriented.”
Export growth in China, Japan, South Korea and Singapore previously tracked a rebound in the Institute for Supply Management’s US factory index as it recovered in 2009. This year, exports from South Korea, Singapore and China to the US rose less in the first five months than they did during the same period in 2007 and 2010. Shipments from China gained 11.2 percent from January to May this year, compared with about 20 percent in 2007, the year before the start of the global financial crisis, data showed.
While Chinese exports spiked in February, the 48 percent rise from a year earlier was skewed by distortions from the timing of the Lunar New Year holiday. Slumping commodity prices in countries like South Korea have also affected the numbers? The smaller export growth also reflects a more general slowdown in global trade since the financial crisis.
Certainly, the US economic recovery itself remains nascent. Growth slumped 0.7 percent year-on-year in the first quarter amid severe weather, port disruptions and a stronger US dollar.
The US economy is poised to pick up this quarter, a Bloomberg survey showed. Whether that will spur exports from Asia is less certain.
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