DBS Group Research expects China’s exports to grow 25.7% year-on-year in September, supported by strong electronics demand and improving manufacturing PMIs. The report notes strengthening external trade indicators and freight activity, alongside a rebound in factory-gate and raw material prices, with CPI inflation seen edging up to 1.0% but still constrained by soft domestic demand.

Strong exports with moderate CPI inflation

“Exports growth is expected to remain robust at 25.7% yoy in September, supported by continued strength in electronics demand.”

“Both the official and Caixin manufacturing PMIs rose above the 50 expansion threshold during the month, pointing to improving manufacturing activity.”

“External trade indicators also strengthened, with average daily deadweight tonnage handled at China’s 20 major ports accelerating from -0.7% yoy in August to 7.2% in September.”

“Freight activity improved as well, as growth in international cargo flights picked up from -1.4% yoy to 3.6% over the same period.”

“On the price front, factory-gate and raw material prices rebounded amid the renewed escalation in geopolitical tensions. Main raw material purchasing price and producer price subPMI increased from 56.6 and 50.4 to 60.8 and 54.0 during the period. However, downstream consumer price pressures are likely to remain relatively subdued under the pricing-band mechanism.”

“As a result, CPI inflation is expected to edge up from 0.8% yoy in August to 1.0% in September.”