Global trade firm in Feb; India, China lead goods exports growth: S&P

Trade conditions deteriorated again in February, while the reduction in export orders was marginal, having softened for a second successive month.

This reflected a near-stabilisation of global trade conditions ahead of additional US tariffs implementation, a commentary by Jingyi Pan, economics associate director of operations at the index management and production group at the company, noted.

The downturn in manufacturing new export orders eased into the second month of 2025. In fact, the pace at which manufacturing export orders shrank was the slowest in the current nine-month sequence and only marginal, thereby signalling a near-steadying of trade flows.

The latest easing of export orders decline unfolded amidst further improvements in overall manufacturing sector conditions.

Global goods new orders and output growth both accelerated in February, with the former notably rising at the fastest pace in nearly three years.

Furthermore, manufacturing sector sentiment picked up with goods producers being the most optimistic since last May.

The forward-looking indicators, therefore, painted a positive picture for near-term manufacturing production growth, including with the export order index being on an uptrend.

Regional variations, however, were apparent with incoming new orders from abroad rising largely for Asian manufacturers, while the United States acted as a drag on global exports in the month.

With additional tariffs being put in place in various parts of the world in early March, the risk is that rising prices may also dampen export demand headed further into 2025, said the commentary.

The extent to which PMI survey respondents indicated that exports declined due to higher prices was already at the highest seen since last July.

Developed economies received fewer export orders across the manufacturing sector, falling at an accelerated rate. In contrast, emerging market export business expanded for a second successive month and at the quickest pace in ten months.

Against a backdrop of trade uncertainty in February, there lacks conviction that the ongoing improvement in emerging market goods export represent a recovery. Instead, S&P Global Market Intelligence continues to find evidence of the trend representing the front-loading ahead of further US tariffs, especially amidst frequent mentions of US policy uncertainty among panellists in the latest survey period.

The number of top ten trading economies reporting higher exports increased to four from three in January, though with South Korea and Russia recording only marginal improvements.

Growth in exports continued to be led by India. Export demand for Indian manufactured goods remained strong even as it eased from January's near 14-year high, thereby underscoring the robust performance of the Indian manufacturing sector at the start of 2025.

Moreover, India continued to maintain a wide lead against the next best-performing major goods exporter, i.e., China, in February. Export orders in China returned to growth for the first time in three months. Although modest, the rate of export orders expansion was the fastest since last April.

In contrast, the United Kingdom recorded the sharpest fall in goods trade among the top ten trading economies. The pace at which manufacturing export orders declined was also the steepest in a year, unfolding amidst a deepening downturn in the UK manufacturing sector that is affected by weak demand and rising price pressures.

The United States and Canada meanwhile both saw similar steep export falls, both having seen goods trade conditions worsen from near-neutral conditions at the start of the year.

The European Union, meanwhile, saw the rate of export demand contraction ease to the least pronounced level in nearly three years.

Fibre2Fashion News Desk (DS)