South Korean exports last month suffered their worst decline in eight months as a drop in Chinese demand and the effect from fewer working days more than offset growing purchases by European and U.S. customers.

South Korea, the fourth-largest economy in Asia, said on Sunday exports last month fell 0.9 percent from a year earlier to $47.88 billion, while imports rose 0.3 percent to $42.53 billion. It resulted in a trade surplus of $5.35 billion.

Exports to China plunged 9 percent in May from a year before, setting the fastest drop in nearly five years and eclipsing a stellar 32 percent jump in sales to the European Union and a 4.5 percent rise in shipments to the United States.

Analysts and the government called for caution over the May export data, pointing to distortions arising from unusually long holidays falling in May in South Korea and China.

“In May, China had many holidays along with ours and so that, on top of China’s slowdown, steepened the fall in exports. I think it’s too early to say that we will continue to see a decline in shipments to China,” said Park Sang-hyun, chief economist at HI Investment & Securities.

Partly supporting the view on holiday effects, a Chinese government survey showed on Sunday the country’s official Purchasing Managers’ Index rose to 50.8 in May from 50.4 in April, indicating its manufacturing activity picked up.

China Remains Drag

In South Korea, there were 1.5 fewer working days in May than a year earlier and this meant the average exports per working day in fact rose 6 percent to $2.23 billion, the second-best on record, from $2.10 billion a year before.

The median forecast from a Reuters survey of 16 economists was for South Korean exports to grow 1.2 percent in May from a year before, but five of them had predicted losses. Imports were seen up a median 4.2 percent.

It was the first decline in exports since January this year and the sharpest since September last year.

As the world’s seventh-largest exporter, South Korea is the first major industrial powerhouse to report foreign trade data each month, making its data an important guide on the latest state of the global economy.

The country has some of the world’s top providers of smartphones, cars, ships and industrial equipment such as Samsung Electronics Co Ltd, Hyundai Motor Co and Hyundai Heavy Industries Co Ltd.

South Korea’s export figures by key markets underscored the global economy on an uneven pattern of recovery as the slowing growth in China, the world’s second-largest economy, remains a drag whereas the advanced economies were leading the way.

The ministry said oil products and liquid-crystal display panels were the main products for which Chinese customers sharply reduced purchases from South Korea.

It said the slowing demand from China deserved a close watch over the coming months, while adding South Korea’s global exports as a whole would likely keep growing thanks to a sustained recovery in the advanced economies.

“Given the slowing exports to China in recent months, the government plans to draw up ways to help boost shipments there including those based on the analysis of the changing imports pattern in China,” the ministry said in a statement.

South Korea’s central bank expects economic growth to quicken to 4 percent this year from 3 percent last year, predicting both exports and domestic demand would improve.

“Exports tend to go with the global cycle, and we see things picking up in the second half of the year as the situation in the U.S. and the EU are expected to improve then,” said Park Chong-hoon, an economist at Standard Chartered Bank Korea. (Reuters)