China Trade Balance Grows In May; US Wholesale Inventory Marginally Up

China’s trade balance grew more than expected in May. This was driven by steady exports and a sharp decline in imports, although export growth still missed expectations. High U.S. trade tariffs dented overseas demand. Trade balance grew to a surplus of $103.22 billion in May, government data showed on Monday. This is above expectations of a surplus of $101.10 billion. This is a growth over the $96.18 billion surplus in April. China’s exports, a key driver of the country’s massive trade surplus, still expanded in May, albeit at a slower than expected pace. Growth in exports also weakened sharply. Exports grew 4.8% year-on-year missing expectations of a 5% increase and falling from the 8.1% rise seen last month.

Exports from China grew in May also because many US companies rushed to import from China during the period of temporary pause on higher tariffs on Chinese goods. These included many retailers and apparel chains.

 U.S. Wholesale Inventories Show Modest Growth, Beating Forecasts 

The latest economic data reveals a slight uptick in U.S. Wholesale Inventories, indicating a modest but steady growth in the total value of goods held in inventory by wholesalers. The actual figure came in at 0.2%, surpassing the forecasted stagnation. The 0.2% increase in Wholesale Inventories, while small, is significant in that it beat the forecasted figure of 0.0%. This suggests that wholesalers are maintaining a higher inventory level than anticipated, which could be interpreted as a positive sign for the U.S. economy. It indicates a level of confidence in the market, as wholesalers are willing to hold onto more stock in anticipation of future sales.

US wholesalers are also holding higher inventories as they expect wholesale prices to rise up sharply if the Trump tariffs come fully into force.

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Source: Bureau of Statistics , Government of China