The inconsistency or unevenness of the economic data is a huge part of the problem. The world wants to move in nice, clean straight lines and nowhere is that more of an assumption than economics. There is some allowance for variation but that is always expected to be minimal. The past four years or so just haven’t seen much deference to convention.
Last month for May 2016, China reported imports that were almost even with May 2015. With revisions this month, the year-over-year figure is just barely negative at -0.1% (with a huge increase in crude oil imports). Even though it was way out of line with prior months, April’s import number was -10.5%, the mainstream wanted so badly to believe it was the start of the full bloom of ‘stimulus.’ But unevenness is just a part of this slowdown and eurodollar decay, meaning there really shouldn’t be much surprise and disappointment when China reported today the import estimate for June 2016 falling back to -8.4%.
For Q2 overall, imports fell ‘only’ 6.5% from Q2 2015, about half the pace of contraction in Q1. Given that Chinese imports declined almost 14% in Q2 2015 from Q2 2014, the current growth rate starts to matter much less from the perspective of time. In other words, imports in Q2 2016 were 19.3% less than Q2 2014, where the worst part of that result, economically speaking, is not the 20% decline but the two years and no turnaround yet indicated.
This post was published at David Stockmans Contra Corner on July 13, 2016.
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