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April Data Shows IP & Retail Sales Divergence, Property Indicators Still Weak

CHINA DATA
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China April activity data was mixed, albeit with more downside surprises than up relative to consensus expectations. It continues to highlight some divergent trends within the economy, particularly in terms of retail spending and industrial output, see the chart below.

  • Industrial production was firmer than expected at +6.7% y/y (forecast was 5.5% and prior 4.5%). We are back to late 2023 levels from a y/y standpoint. Strength was seen in tech related areas, along with motor vehicles. EV production maintained a heady +39.2% y/y pace. Part of the commodity space were weaker though, with cement and steel down in y/y terms.
  • Retail sales surprised on the downside, printing at +2.3% y/y versus 3.7% forecast and 3.1% prior. Most sub-sectors saw weaker spending in y/y terms versus March outcomes. Clothing, office supplies, cars and construction materials are all running at negative y/y pace.
  • Fixed asset investment was +4.2% y/y ytd, against a 4.6% forecast. Private sector investment eased from 0.5% to 0.3%. Infrastructure spending remain firm at +6.0%.
  • Property investment remained depressed at -9.8% y/y ytd, slightly weaker than expected. New home sales are down -31.1%, while new property construction was -24.6%, which is similar to March outcomes.
  • The surveyed jobless rate was 5.0%, against a forecast of 5.2%.
  • Overall, the data is likely to see further calls for policy support in the property space, while the divergence in retail spending and IP highlights the unevenness of the current economic backdrop.

Fig 1: China Retail Sales & Industrial Production Growth Diverging

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China April activity data was mixed, albeit with more downside surprises than up relative to consensus expectations. It continues to highlight some divergent trends within the economy, particularly in terms of retail spending and industrial output, see the chart below.

  • Industrial production was firmer than expected at +6.7% y/y (forecast was 5.5% and prior 4.5%). We are back to late 2023 levels from a y/y standpoint. Strength was seen in tech related areas, along with motor vehicles. EV production maintained a heady +39.2% y/y pace. Part of the commodity space were weaker though, with cement and steel down in y/y terms.
  • Retail sales surprised on the downside, printing at +2.3% y/y versus 3.7% forecast and 3.1% prior. Most sub-sectors saw weaker spending in y/y terms versus March outcomes. Clothing, office supplies, cars and construction materials are all running at negative y/y pace.
  • Fixed asset investment was +4.2% y/y ytd, against a 4.6% forecast. Private sector investment eased from 0.5% to 0.3%. Infrastructure spending remain firm at +6.0%.
  • Property investment remained depressed at -9.8% y/y ytd, slightly weaker than expected. New home sales are down -31.1%, while new property construction was -24.6%, which is similar to March outcomes.
  • The surveyed jobless rate was 5.0%, against a forecast of 5.2%.
  • Overall, the data is likely to see further calls for policy support in the property space, while the divergence in retail spending and IP highlights the unevenness of the current economic backdrop.

Fig 1: China Retail Sales & Industrial Production Growth Diverging

Keep reading...Show less