Data Mixed But Economy Recovering

The swathe of China data released for February was mixed, signalling an economy recovering but still facing hurdles. Property sector results were better than expected but IP was softer. Reopening has driven a solid recovery in retail sales but there was an unexpected seasonal tick up in the unemployment rate.

• Property investment in February fell 5.7% y/y YTD after contracting 10% y/y in December, which now looks like it was the trough. Commercialised building sales rose 3.5% y/y after slumping 28.3% y/y in December. Overall non-rural investment rose 5.5%, which was stronger than expected and up from 5.1% y/y YTD.
• Retail sales rose a robust 3.5% y/y YTD in February, in line with expectations, after having been lacklustre for most of 2022. But the surveyed unemployment rate rose to 5.6% from 5.5% due to seasonal factors, whereas it was expected to decline to 5.3%.
• IP growth was disappointing moderating to 2.4% y/y YTD in February from 3.6% at the end of 2022. Output of energy-related products rose at the start of 2023 with coal ouput up 5.8% y/y and crude processing +3.3% y/y.