China May exports seen picking up, outlook shaky

China's exports may have picked up modestly in May due to seasonal volatility, but the outlook remains shaky as Europe struggles to cope with its debt crisis and amid signs of US economic weakness, a Reuters poll showed.

A pair of Chinese manufacturing surveys has pointed to signs of a broadening slowdown in the economy on a deeper-than-expected deterioration in demand at home and abroad, also signaling the likelihood of more policy easing.

Hurt by a recession in Europe and a patchy economic recovery in the United States - the regions China most trades with - export growth has slumped to single-digit levels this year, a long way from growth of more than 20 percent seen in 2010.

Forecasts from 22 analysts call for China's exports to have grown an average 6.8 percent in May from a year earlier while imports may have gained 5 percent.

The monthly trade surplus is seen at $16.2 billion.

April saw exports climb a more modest 4.9 percent. Many analysts believe Chinese companies tend to ship more goods overseas in May as there is often a lull in April.

The trade data is due on Sunday. Other data, due on Saturday, is expected to show Chinese inflation cooled further in May and factory output growth near three-year lows, likely fuelling calls for China's government to take more policy action.

Chinese exporters are facing a double whammy of slackening global demand as well as rising labor and raw materials costs.

New orders for US factory goods fell in April for the third time in four months as demand slipped for everything from cars and machinery to computers.

"The prospects for China's exports are squeezed on both sides as the euro zone crisis escalates and Chinese exports become more expensive," analysts at Mizuho said in a research note.

China's annual economic growth is widely expected to dip below 8 percent in the second quarter, a sixth consecutive quarter of slowdown.

Rebounding import growth may be driven by improving domestic demand as the government has been fast-tracking investment projects in a bid to bolster growth, analysts say.