China: April activity data slow more than expected – Nomura

The analysis team at Nomura explains that Chinese growth momentum moderated in April as growth of production, fixed asset investment and consumption all slowed on a year-on-year basis.   

Key Quotes

“Industrial production growth eased to a much weaker-than-expected 6.5% y-o-y after jumping to 7.6% in March (Consensus: 7.0%; Nomura: 7.2%); output growth of manufacturing and utility sectors both slowed while the output growth of the mining sector improved slightly.”

“Fixed asset investment growth ticked down by 0.3 percentage points (pp) to 8.9% y-o-y ytd in April (Consensus and Nomura: 9.1%), largely weighed down by slower investment growth in manufacturing (down by 0.9pp to 4.9%) and infrastructure (down by 0.5pp to 18.2%).”

“Total property investment growth picked up slightly, but this may have been a result of rising land prices (land sales value growth rose by 17.5pp to 34.2% y-o-y ytd while land sales volume growth rose more modestly by 2.4pp to 8.1%). Growth of floor space under construction remained unchanged. There are signs of the sector cooling: residential property investment growth moderated by 0.6pp and property sales growth slowed by 3.8pp.”

“Retail sales growth also slowed to 10.7% y-o-y from 10.9%, consistent with our forecast (Consensus: 10.8%; Nomura: 10.7%). Given rising CPI inflation in April, real retail sales growth slowed by 0.5pp to 9.7% y-o-y.”

“The data released today were consistent with moderating trade data and falling PMIs in April and point to a weakening of momentum. We maintain our forecast for a shallow slowdown over the rest of this year, as we expect the property sector to cool further albeit gradually. We maintain our 6.7% GDP growth forecast for 2017 and still expect real GDP growth to slow to 6.8% y-o-y in Q2 from 6.9% in Q1.”