Chinese export order expectations rebounded significantly in March, Panjiva's analysis of the CFLP survey shows. A reading of 46.4% (where 50.0% indicates a neutral outlook), compares to 28.7% a month earlier.

While that's a significant gain, the statistical agency has stated that the surge in the index is partly driven by a participation rate effect (96.6% in this survey versus 78.9%), as well as being a chained index. Indeed, the agency has warned that "it can not be judged that China's economy has fully returned to normal levels and achieved trend." That may be one reason that the Chinese government is also considering tax-based support for exporters, Reuters reports.

Furthermore, it should be noted that the figure still indicates an ongoing contraction in orders, which has been the case with one exception since June 2018. Import expectations also climbed to 48.4% from 31.9% — again still in contractionary territory.

The latter bodes ill for delivery of China's commitments under the phase 1 trade deal with the U.S., as well as export potential from the rest of the world. European trade is already under pressure on the basis of recent German export sentiment figures discussed in Panjiva's research of March 27.

Evidence from South Korean government data shows that merchandise trade for South Korea fell by just 0.2% year over year in March, including a 0.2% slip in exports. The government has noted that the impact from coronavirus-related disruptions was minimal but may spread in April as lock-downs spread to the U.S. and EU. Excluding the volatile shipping sector, there was actually a 1.3% improvement in exports.

Panjiva's analysis shows that exports to China only declined by 5.6% year over year in March. That likely reflects the slow return to business as usual, as well as potential stockpiling by Chinese firms as they seek to ensure a smooth transition back to full production.

Shipments to the U.S., meanwhile, surged 17.3% higher — the economy remained mostly out of lockdown through the month, while the comparator from a year earlier was unusually low. The continued shipments may contribute to a buildup of undelivered products at U.S. ports.

Among the major product lines, though there were only a handful of products where exports improved including autos, which rose by 3.0% and may reflect a rebound in production at automaker that had to close the month before, and computers, which surged 82.3% higher.

The latter is perhaps not a surprise given the jump in demand for work-from-home equipment outlined in Panjiva's March 26 report. A similar trend can be seen in network equipment which rose by 3.7%, and mobile phones which improved by 20.7%. Those increases may prove temporary once corporate budgets are either satisfied or exhausted.

Industrial supplies by contrast continued to decline, indicating continued weak expectations for production flagged for example in the China data above. Exports of semiconductors fell 2.7% — albeit slower than the 5.2% drop seen in the prior three months — while exports of steel and refined oil products declined by 6.5% and 5.9%, respectively.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.