China: April growth weakened due to distortions – Standard Chartered


Standard Chartered analysts point out that China’s activity weakened across the board in April with real growth rates of industrial production (IP), retail sales and fixed asset investment (FAI) slowing to 5.4% y/y, 5.1% y/y and 4%, respectively, in April from 6.4%, 7.0% and 5.2% in Q1.

Key Quotes

“The labour market was stable, with a lower unemployment rate of 5%.”

“We caution against over-reacting to a single month of weak performance. April activity was likely distorted by the following one-off factors: (1) the introduction of VAT cuts in April, which induced companies to front-load purchases in March to benefit from higher input tax deductions and accounting for the abnormal production surge in March followed by weak production in April; and (2) the longer public holidays from 1-4 May. China increased the number of working days in April to compensate for the longer May holidays, which likely delayed consumer spending from April to May. Furthermore, statistically, China tends to post slow growth at the beginning of a quarter and stronger growth in its final month.”

“We maintain our forecast of 6.5% GDP growth for 2019. We expect China to continue with its stimulus plan, including cuts to the individual income tax (last October), value-added tax (April 2019) and social-security contribution fees (May 2019). As per our estimate, the approved budget included stimulus equivalent to 1.8% of GDP.”

“We expect the People’s Bank of China (PBoC) to cut the reserve requirement ratio (RRR) by 50bps each in June and in Q3. We do not think it will use CNY depreciation as a stimulus tool, as this could backfire by destabilising domestic financial markets.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD: bearish strength pointing to lower lows for the year

The EUR/USD pair extended its decline Friday to finish the week sharply lower in the 1.1150 region. The American currency stood victorious on the back of persistent concerns about US-Sino trade tensions and encouraging local data.

EUR/USD News

GBP/USD remains little changed to 1.2730 as Brexit doubts supersede USD pullback

With the doubts over the UK PM May’s Brexit plan’s another failure at the parliament growing strong, the GBP/USD pair trades near 1.2730 during early Monday.

GBP/USD News

USD/JPY rose to intra-day high of 110.20 despite upbeat GDP data

USD/JPY rose to the intra-day high of 110.20 despite Japan’s Q1 2019 GDP data beat forecasts on early Monday. The reason for the rise could be a downward revision to previous figures. Japan’s first quarter (Q1) gross domestic product (GDP) beat 0.0% forecast .

USD/JPY News

Gold: Mid-August 2018 major-uptrend’s support line tested for third time this month

Technically, the price is below the 50 and 20 DMAs, dropping back from channel resistance with room to go on the RSI to the downside although meeting its mid-April support line.

Gold News

Bitcoin price update: BTC reclaims $7,000, recovery stalled

Bitcoin (BTC) has recovered from a scary flash crash that took it all the way down from $7,800 to as low as $6,512. The first digital coin lost about 16% of its value in a matter of hour with no particular reason .

Read more

Majors

Cryptocurrencies

Signatures