South Korea’s exports slump eased for a second month in May, an early sign that weakness in global demand may finally be starting to moderate.

Shipments adjusted for working-day differences fell 9.3% from a year earlier, the smallest decline since October, according to data released Thursday by the customs office.

Headline exports dropped 15.2%, less than economists’ expectations for a 16.3% decline, according to the trade ministry. Overall imports fell 14%, resulting in a trade deficit of $2.1 billion, the narrowest in a year.

Korean exports serve as a barometer of international trade as the nation sells items such as chips, displays and refined oil, which straddle supply lines. While the data indicates some recovery in demand for Korean goods, overall exports remain weak amid a surge in chip inventories and China’s lackluster economic expansion.

The South Korean won rose 0.5% to 1,320.25 per dollar Thursday following the data release. The currency has weakened about 4% against the greenback this year, making it one of the worst-performing in Asia.

“Things may not be as bad as some expected,” said Ha Keon-hyeong, an economist at Shinhan Securities Co. But in order for this to become a clear upward trend, “the tech sector has to pick up, and there aren’t many signs showing that at the moment,” Ha said.

China’s economic recovery weakened in May as manufacturing activity fell to the lowest level since December 2022. Meanwhile, South Korea’s semiconductor inventory surged by the most in seven years in April, underscoring ongoing weakness for chips.

The ongoing contraction in exports is set to weigh on South Korea’s economic growth. The Bank of Korea last week cut its forecast for gross domestic product growth in 2023 to 1.4%, citing lower exports and investments.

(Updates with analyst comment, market reaction starting in fifth paragraph.)