23 Dec 2016
China Sourcing Update (Price Index for US Imports from China) Nov 2016
Price index for US imports from China falls again
Compiled by the US Department of Labor, the price index for US imports from China went down to 100.5 in November, the lowest level since September 2010, after staying flat in October (see exhibit 1).
In our view, the drop in the price index in November was mainly due to the depreciation of the Chinese yuan against the US dollar during the month; the daily fixing rate of the Chinese yuan depreciated against the US dollar by 1.8% in November. This may have more than offset the rise in ex-factory prices of Chinese products in Renminbi terms: China’s producer price index of industrial products (PPI), a major indicator of ex-factory prices of industrial products, rose by 1.5% mom in the month.
Looking ahead, the ex-factory prices of Chinese products are expected to rise further in the near future. However, the daily fixing rate of the Chinese yuan depreciated against the US dollar by 0.8% from end-November to 22 December, and is likely to depreciate further in the near term. All in all, we expect the price index for US imports from China to stay low in the coming months.
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