China: May data disappoints – Standard Chartered
Analysts at Standard Chartered point out that China’s May data was disappointing, as industrial production (IP) growth slowed to 6.8% y/y from 7.0% in April, weaker than the market expectation of 7.0%.
Key Quotes
“Average IP growth in April-May was 6.9%, compared with 6.8% in Q1-2018. While the headline does not look bad, the underlying momentum was likely weaker, as the official IP data only captures the performance of companies above a designated size and possibly understates difficulties faced by smaller players. Meanwhile, the services production index was little changed, up 8.1% YTD in May.”
“By comparison, the slowdown in retail sales and fixed asset investment (FAI) growth was more prominent. Retail sales growth slowed to 8.5% y/y from 9.4% in April.”
“The May data reinforces our view that China’s economy faces short-term headwinds, including (1) a continued housing market downtrend; (2) slower credit growth and tighter financial regulations that have increased corporate borrowing costs and resulted in more debt defaults; and (3) plateauing export growth, and a potential continuation of US-China trade tensions.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
