China’s Export Growth Slows Amid Concern of Slowdown

HONG KONG — Chinese exports showed only modest growth in May, rising just 1 percent from a year earlier, officials said Saturday, an increase that was much lower than analysts’ expectations.

In April, the increase was 14.7 percent, a figure that was believed to have been artificially inflated. Before Saturday’s figure came out, analysts expected Chinese exports to have risen at least 7 percent in May.

Concern is rising about the sputtering Chinese economy and tightening liquidity. The European Union, China’s biggest trading partner, remains mired in a stubborn economic downturn, while in the United States, China’s next-largest export market, the Federal Reserve has recently been sending signals it may start curtailing its stimulative monetary policies.

China’s figures showed it had a trade surplus of $20.4 billion in May, up from $19.3 billion, as imports declined 0.3 percent, the Customs Administration said. The drop in imports — however slight — was a possible sign of weakness in the domestic economy.

Chinese stocks declined last week, their first weekly decline in six weeks, amid signs of tightening liquidity within China. A clearer picture of the Chinese economy is expected Sunday, when the government releases data on retail sales, industrial output and inflation.

Economists had expected the May figures to show a slowdown, as the government has begun a campaign to prevent companies from overstating their exports. Many businesses are believed to have done so in March and April as a way to bypass currency controls and bring more money into the country to speculate on further appreciation of China’s renminbi.

The main evidence for such strategies lay in official statistics showing soaring exports to Hong Kong and bonded export zones on the mainland even as exports to the rest of the world from these places remained weak.

Louis Kuijs, an economist in the Hong Kong office of the Royal Bank of Scotland, had estimated in May that more than half of the officially reported growth of 14.7 percent in April from a year earlier was the result of companies’ manipulating their statistics to place bets on the Chinese currency. The true rate of export growth in April, without the effects of these strategies, was more like 5.7 percent.

The sharp slowdown in export growth in May “in part reflects the impact of a clampdown by the government on firms dressing up financial inflows as exports,” Mr. Kuijs said in an e-mail on Saturday.

Chinese customs data compiled by CEIC Data in Hong Kong showed that the mainland’s exports to Hong Kong were up only 7.7 percent in May from a year earlier. In April, they had been up 57.2 percent from the same month last year, and in March they had been up 92.9 percent.

Changing expectations about China’s currency — fewer businesspeople now expect further appreciation — may have also reduced the incentive for companies to overstate exports, Mr. Kuijs said.

Jobs Data Ease Fears of Economic Slowdown in U.S.

By Ben Werschkul, Pedro Rafael Rosado, Channon Hodge, Erica Berenstein and Alyssa KimDeconstructing a Lift in Jobs Numbers: The Times’s Catherine Rampell on the 165,000 jobs added to the economy ahead of what is normally a spring slump.

Washington may be hitting the brakes, but the private sector is still rolling ahead, helping create nearly 200,000 jobs a month, on average, since the beginning of the year and forcing the overall unemployment rate in April down to its lowest level since the end of 2008.

Source: Bureau of Labor Statistics Job candidates waited to meet with employers at a job and internship fair in New York last week.

This push-and-pull dynamic was evident in data released Friday by the Labor Department, as private employers added 176,000 people to their payrolls even as the public sector shed an additional 11,000 workers.

The latest figures painted a somewhat brighter picture of the overall economy than had been expected as the government sharply revised upward its estimate for job creation in the previous two months. Those revisions concluded that the economy generated a robust 332,000 jobs in February, not the 268,000 originally reported, and 138,000 in March, up from 88,000.

The news sent the stock market soaring to new highs, with major stock market indexes closing up 1 percent for the day.

Still, at 7.5 percent, a slight drop from last month’s 7.6 percent, the jobless rate remains far higher than it typically would be this far into a recovery. It is also a full percentage point above the level the Federal Reserve has said it wants to see before it will consider raising interest rates from their current levels near zero.

As a result, most experts expect the economy to continue to be buffeted by countervailing factors in the months ahead, with business activity and the Fed providing a healthy measure of support for growth even as fiscal austerity in Washington makes a substantial drop in the unemployment rate unlikely.

“The drag from the government sector is quite substantial,” said Gregory Daco, senior principal economist at IHS Global Insight. “Given the fiscal headwinds, the private sector is doing O.K.”

Despite repeated fears of a double-dip recession, an economy that has endured a spring swoon for three consecutive years and other potential perils, the country’s rate of job creation has been remarkably steady, if subdued. Over the last three years, the economy has added an average of 162,000 jobs a month, within a hairbreadth of April’s pace, at least as initially estimated, of 165,000 new jobs.

But experts have been warning that the economy and job creation are likely to slow in the second quarter, largely as a result of fiscal tightening in Washington. Payroll taxes increased in January, and the effect of across-the-board spending cuts mandated by Congress is expected to be felt more broadly in the months ahead.

While the private sector has been on the upswing since last summer, cutbacks in government employment continue to prevent a stronger acceleration in the economy, economists said.

“If it weren’t for the government, the economy would be stronger,” said Mr. Daco, citing the spending cuts hitting now, as well as the higher Social Security deductions for all workers and increased income taxes for top earners that began in January.

On the other hand, he said, “If the Fed hadn’t loosened monetary policy, we’d be seeing weaker growth. Both sides are generating opposing forces.”

Even though job growth now looks better, continued strains in the economy and data this week showing inflation over the last 12 months running at a low 1 percent rate suggest that the Fed is not likely to slow its $85 billion in monthly bond purchases intended to stimulate the economy for at least the next few months. On Wednesday, the Fed said it was “prepared to increase or reduce the pace of its purchases,” depending on the outlook for the labor market and inflation.

The White House was quick to highlight Friday’s report, even as it warned of the potential dangers from the fiscal squeeze.

“While more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Alan Krueger, chairman of President Obama’s Council of Economic Advisers, said in a statement. Mr. Krueger urged Congress to replace automatic budget cuts with a more balanced approach. “Now is not the time for Washington to impose self-inflicted wounds on the economy,” he said.

Wider Asia Is Seen as Falling Prey to Slowdown

HONG KONG — A diminished forecast from the Asian Development Bank and another weak economic number from China on Wednesday emphasized that the days of double-digit growth in Asia are a thing of the past as global economic turmoil and slowing momentum hobble the region’s economies.

Emerging Asia — which includes countries like China, India, Indonesia and Thailand, but not developed Japan — is likely to grow just 6.1 percent in 2012, little more than in 2009, when the world was still reeling from the global financial crisis, the development bank said in its latest economic update for the region. Next year, it said, growth is expected to edge up to 6.7 percent.

Both numbers represented sharp cuts from the bank’s previous forecasts, made in April, of 6.9 percent for 2012 and 7.3 percent for 2013, highlighting the deterioration in global conditions this year.

“Growth is slowing down much more rapidly than expected,” the bank’s chief economist, Changyong Rhee, said at a news conference in Hong Kong.

Moreover, the slowdown was particularly marked in the region’s economic heavyweights, China and India, where growth is expected to reach 7.7 percent and 5.6 percent, respectively, this year.

Again, both figures were well below both the Asian Development Bank’s previous projections and the rates of expansion recorded last year; India has been hit especially hard by homegrown issues like the slow pace of change.

China, which depends more on exports than India, has slowed rapidly during the past year, though policy makers appear comfortable with a growth rate of about 7.5 percent, rather than the double-digit jumps in the years before the financial crisis.

Data from the Chinese service sector Wednesday showed expansion at its weakest pace in many months in September: A purchasing managers’ index released by the statistics office slumped to 53.7 for the month, from 56.3 in August. Figures higher than 50 indicate expansion.

The service sector accounts for about 40 percent of China’s overall growth and about one-third of employment, according to the development bank, and analysts commented that the weak September figure showed that domestic demand, not just exports, was suffering.

“We still see growth in Asia bottoming out” in the third quarter, Klaus Baader, an economist at Société Générale in Hong Kong, wrote in a note, “but the degree of uncertainty has risen.”

The Asian Development Bank stressed that growth in Asia — even at the slower pace it now projects — remained “enviable.”

“There is no need to panic,” said Mr. Rhee, the chief economist, adding that China’s wait-and-see approach on measures to prop up growth appeared to be “the right approach right now.”

Analysts have long argued that China and other emerging economies must focus more on the quality rather than the pure speed of expansion, reduce their economies’ reliance on exports and manufacturing for growth and shift the focus toward fostering domestic demand, improving productivity and encouraging the services sector.

The service sector in the region is already much larger than widely believed, Mr. Rhee said, but poor infrastructure and a lack of qualified staff hamper development, while poorly designed and inconsistently executed regulations often stifle the business environment .

“A slew of regulations restrict competition and hamper development of the services sector, affecting everything from the corner shop to mobile telephones,” Mr. Rhee said. “These barriers need to be dismantled.”