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Surge in Chinese exports drives noticeable rise in global
exports over first two months of 2021
Statistical noise makes annual comparisons challenging but data
add to view that global economy continues to recover
Pick-up in trade has exacerbated logistical difficulties,
especially in sourcing goods from China
According to our latest Global Trade Index, global trade was
estimated to be 14.9% higher than a year ago in January. That's the
first time that growth has reached double digits since the early
2010s and adds to our view that the global economy is maintaining
its recovery from the devastating effects on activity from the
global coronavirus disease 2019 (COVID-19) pandemic.
However, growth was driven in the main by a surge in Chinese
exports: recent official data indicated an average year-on-year
increase in Chinese exports of around 60% over the first two months
of 2020. Growth has been flattered by the sharp drop in trade seen
in early 2020, when the pandemic led to the widespread closure of
China's economy.
Regional divergences are also notably apparent in the early
reports of official data, with growth seen in key Asian exporters
(Japan, South Korea) but some weakness persisting amongst European
nations. Intra-European trade was in part negatively impacted by
challenges related to Brexit at the start of 2021.
Looking through the statistical noise owing to these temporary
and pandemic base impacts - which are likely to make comparisons
with year-on-year figures challenging throughout much of 2021 -
global trade is nonetheless up around 10% on equivalent 2019
volumes.
Given the challenges with base comparisons - and adding Chinese
New Year distortions on top of this - early estimates are
exhibiting a naturally higher level of uncertainty than usual, but
we expect year-on-year overall global trade growth to have pushed
slightly higher again in February, probably reaching close to 16%.
Whilst this outcome is again driven by strong growth in official
Chinese statistics, positive trends in PMI data for the exporting
behemoths of Germany and Japan reinforce the view of positive
momentum in global trade heading into early spring.
A consequence of the recovery in global trade has been a
noticeable stretching of supply-chains, with our global
manufacturing PMI suppliers' delivery times index recording levels
in recent months unsurpassed in over 20 years of data availability
- with the exception of the start of the pandemic last year.
Demand dynamics are noticeably different today than they were
last spring of course: since the broad reopening of economies last
summer, global industrial output has staged a noticeable recovery
from the forced closures of 2020, with demand for inputs and goods
in manufacturing processes surging higher in recent months.
However, the supply-side has struggled to readjust to the rise
in industrial demand, with logistical difficulties widely reported
by PMI panellists around the world. Combined with surging commodity
prices, higher quoted costs for transportation, especially in
shipping, explain why overall manufacturing input prices have risen
to the greatest degree in nearly 10 years.
Delays have been especially noticeable from suppliers based in
Asia, according to PMI panellists, and this is well highlighted by
bulker fleet congestion metrics from our own Commodities
at Sea, a service that provides near-real time insight into
flows of major globally traded commodities and freight.
Looking specifically at port congestion statistics for China -
which are based on the number of vessels currently anchored outside
Chinese ports - at the start of the year levels of congestion have
hit recent records, maintaining a trend that has been apparent in
recent months.
February figures do however point to a stabilisation of the
situation, with congestion statistics showing a drop compared to
January and the annual rise the lowest recorded in nearly a
year-and-a-half.
Moreover, weekly data for the first three weeks of March
indicates that the downward trend is being sustained.
Whilst that will provide some hope that lead times will
eventually start to improve - and give support to the views that
recent price spikes will prove to be more transitory than permanent
in nature - to highlight the scale of the challenge, the number of
anchored vessels was still over 54% higher when compared to early
2019. Supply-side challenges are subsequently likely to persist for
some time to come.
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
