July exports saw a 23.9% year-on-year increase, slightly below June's figure but still ranking as the second-highest for the year. Driven by this performance, cumulative exports for the first seven months rose further to 18.5% year-on-year.
On an annual basis, this growth rate is the second highest in the past 15 years (since 2012), trailing only the 2021 global trade recovery. Export growth was 21.8% in January-February, 2.5% in March, 14.0% in April, 19.3% in May, 27.0% in June, and 23.9% in July.
The robust global economy during this period was a key backdrop. The US ISM Manufacturing PMI hit its highest level for the year in July, while the Services PMI also slightly exceeded June's reading. The Eurozone's July Composite PMI came in at 52, up from 50 in June, marking the strongest business activity growth in eight months. Despite geopolitical tensions in the Middle East and extreme weather events linked to El Niño, global economic and trade activity remained resilient, partly due to the restructuring benefits driven by the AI technology revolution. The US ISM Manufacturing PMI was 55.6 in July, up from 53.3, and the ISM Services PMI was 54.1, up from 54.0.
In a previous report, it was noted that while supply shocks like high energy prices from Middle East conflicts and tariff impacts were present, they did not materially affect economic growth or trade in major economies. The restructuring benefits from the AI revolution have served as a significant counterbalance.
The semiconductor supply chain was a major driver of exports. The combined export value of integrated circuits and automatic data processing equipment surged 92.7% year-on-year in July. Excluding these two categories, overall export growth was 15.5%, meaning these sectors contributed 8.4 percentage points to total growth. Considering the broader AI industry's impact on exports of metals, chemicals, power generation equipment, and some building materials, the actual contribution is even higher. This intra-industry trade also boosted imports, with integrated circuit imports rising 71.1% year-on-year in July, accounting for 22% of total imports for the month. Specifically, July integrated circuit exports were up 116.6% year-on-year, and automatic data processing equipment exports rose 67.4%, with the combined growth at 92.7%.
However, a marginal inflection point is worth noting. South Korea's semiconductor export value and growth rate in July were slightly below June's levels. Vietnam's exports of electronic parts, computers, and accessories also dipped slightly. China's integrated circuit export growth eased from its June peak. This trend suggests that as the period of one-way order increases passes, price contributions decline, and the base effect rises, semiconductor exports may shift from "accelerating expansion" to "decelerating expansion" in the second half of the year. South Korea's July semiconductor export growth was 178.7%, down from 199.5% in June. Vietnam's July exports of electronic parts, computers, and accessories grew 55.3%, slightly below the 61.2% in June. China's July integrated circuit export growth was 116.6%, down from 121.9% in June.
Beyond semiconductors, high-growth exports included automobiles and ships. July auto exports grew 60.4% year-on-year, and ship exports rose 92.4%. Excluding autos, ships, integrated circuits, and automatic data processing equipment, July export growth was 12.5%. The global expansion of China's high-end manufacturing is a clear trend. China's auto market share globally reached 31% in the first half of the year. Domestic auto brands held about an 11% market share in Europe during this period, and in June, Chinese plug-in hybrid vehicles captured a record 34% of that European segment. Data from the Ministry of Natural Resources shows that new ship orders, completions, and order backlogs for Chinese sea-going vessels all rose in the first half of the year, maintaining international market leadership, with new orders surging 105.2% year-on-year.
General machinery equipment exports also accelerated notably, with a 31.4% year-on-year increase in July. This category includes pumps, valves, compressors, fans, gas separation equipment, refrigeration units, reducers, and bearings. Demand may stem from US AI infrastructure construction and a global expansion of manufacturing investment, particularly in industrializing nations in Africa, Latin America, Southeast Asia, India, the Middle East, and Eastern Europe. General machinery exports grew 3.9% year-on-year in January-May, 15.2% in June, and 31.4% in July.
Over the past two years, a feedback loop has formed between US AI capital expenditure and Asian semiconductor manufacturing and exports. In a sense, strong export growth serves as a macro condition and validation for AI industry pricing. July data shows that second-order effects in Asian and Chinese semiconductor exports are experiencing a slight, tentative slowdown, but the first-order characteristic of high year-on-year growth remains unchanged. This, in a sense, reflects the current fundamentals of the supply chain.
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