China’s exports rose 8.5%, continuing growth at a slower pace

China’s exports grew 8.5% in April in US dollar terms, marking a second straight month of growth, while imports fell 7.9% from a year ago.

Economists polled by Reuters estimated that exports would rise 8% in April, while imports were forecast to remain unchanged. In March, imports fell 1.4% year-on-year, while exports saw a surprise jump of 14.8%, public data showed.

China’s trade surplus grew to $90.21 billion in April, up from the $88.2 billion surplus in March.

Softer April trade data is likely to reflect “residual seasonality” after this year’s Lunar New Year, economists at Goldman Sachs said in a Monday note.

Goldman Sachs economists expected to see “the unwinding of this seasonal bias to slow export growth in April,” they wrote in a note earlier this month previewing China’s trade data.

Recent economic data released from the world’s second-largest economy showed China’s services sector remained a bright spot despite disappointing factory data.

The National Bureau of Statistics’ manufacturing purchasing managers’ index reading missed expectations and slipped into contraction territory with a reading of 49.2 in April from March’s 51.9.

“China is past the fastest stage of reopening,” Goldman Sachs economists wrote in a separate note Friday. It reiterated its forecast for China’s economy to see full-year growth of 6% in 2023.

“Recent meetings with mainland clients suggest gradually easing pessimism on near-term growth, but some concern about deflationary pressures, although in our view this is not a major risk for 2023-24,” they wrote.

China’s inflation data is scheduled to be released on Thursday. Economists expect inflation to ease to 0.3% year-on-year growth, according to a Reuters poll.

Month-on-month prices are forecast to remain flat, according to the survey.

The economy’s producer price index is forecast to mark its seventh consecutive month of decline after the index fell 2.5% in March. Economists polled by Reuters expect a fall of 3.2 percent.

“Central bankers in China appeared to have little concerns about deflation, judging by the PBoC’s quarterly monetary policy reports and meeting minutes,” BofA Global Research economists including Helen Qiao wrote in a note, adding that officials appeared confident of a rise in inflation going forward.

BofA economists said they “expect inflationary pressures to increase as the output gap narrows in 2H23, particularly against the backdrop of a new credit cycle starting.”