China: Q2 GDP growth likely stayed above 5% – Standard Chartered

Q2 growth to have moderated to 5.1% y/y (4.7% prior), eased below 1% on a q/q basis. Official PMI survey suggests demand improved m/m in June, supporting production activity. Front-loading activity likely supported export growth; higher oil prices may have lifted import growth. CPI inflation returned to positive territory in June; PPI deflation may have stayed above 3% y/y, Standard Chartered's economists report.

Growth likely eased, but remained resilient in Q2

"The official manufacturing PMI rebounded to 49.7 in June from 49.5 in May on improved new orders and production. Meanwhile, the average reading edged down 0.5pts from Q1 to 49.4 in Q2, indicating a q/q slowdown, partially reflecting the tariff impact. The average readings for services and construction PMIs moved marginally in Q2, suggesting a stable performance without a major improvement or downturn. We estimate seasonally adjusted GDP growth of 0.8% q/q in Q2, slowing from the official estimate of 1.2% in Q1. In turn, GDP growth may have moderated to 5.1% y/y in Q2 from stronger-than-expected growth of 5.4% in Q1."

"Real activity performance likely stayed solid in June. Industrial production (IP) growth may have picked up seasonally at quarter-end. Fixed asset investment (FAI) monthly growth likely improved on a moderation in the housing investment decline. Retail sales growth may have normalised from the holiday boost and an early start to the online shopping festival in May."

"We estimate CPI inflation recovered to 0.1% y/y on higher fuel prices and steady core CPI inflation. We estimate CPI inflation recovered to 0.2% y/y on higher fuel prices and steady core CPI inflation. Total social financing (TSF) growth may have edged up in June on a seasonal expansion in CNY loans, still-sizeable government bond issuance, and increased corporate bond financing."