Gerard Burg, senior economist at NAB, points out that for the Chinese economy, most of the economic indicators were a little weaker in April, and this was prior to the increase in trade tensions with the United States in early May.
Key Quotes
“The increase in rates on the second phase of US tariffs (from 10% to 25% on around US$200 billion worth of goods) and likely public hearings on the third and final phase are a negative for the manufacturing sector and the broader economy as a whole. The trade relationship remains highly uncertain (given that an agreement could still be reached) as is the domestic policy response, meaning that our economic growth forecasts are unchanged for now – at 6.25% this year, 6.0% in 2020 before dipping below 6% in 2021.”
“China’s industrial production increased by 5.4% yoy in April – down from an unusually strong 8.5% yoy in March (which was likely related to one-off factors). PMI surveys are near neutral levels, with export order indicators still weak prior to the latest trade tension escalation.”
“Real fixed asset investment growth slowed to 4.9% yoy (from 6.1% in March). This slowdown has largely been driven by private sector firms, where growth has eased. In contrast, investment by state-owned enterprises has accelerated in recent months.”
“A fall in exports (both month-on-month and year-on-year) and an increase in imports led to a narrowing in China’s trade surplus in April. The surplus totalled US$13.8 billion, the weakest result since the surprise trade deficit recorded in March 2018.”
“Growth in real retail sales slowed significantly in April – down to 5.1% yoy (from 6.7% previously). This was the weakest rate of growth since May 2003. Despite the weak rate of growth of real retail sales, China’s consumer confidence has remained at high levels. In March, confidence dipped marginally to 124.1 points (off an all-time high of 126 points in February).”
“China’s new credit issuance has remained strong in the early months of 2019 – suggesting that authorities are seeking to support growth in the short term.”
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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.