May Activity Data Shows Further Loss Of Post-Opening Momentum

On balance the China May activity prints were weaker than market expectations. IP printed at 3.5% y/y, as forecast and against 5.6% prior. The YTD y/y number was a touch below expectations though. Retail sales y/y disappointed at 12.7%, versus 13.7% forecast and 18.4% prior. Fixed asset investment (FAI) was 4.0% ytd y/y, 4.4% was the forecast (4.7% prior). Property investment remained a meaningful drag down -7.2% ytd y/y, -6.7% was forecast ( -6.2% prior).

• Property sales rose a touch to 11.9% ytd y/y (11.8% prior), but note May house price growth eased back to 0.1% from 0.32% in Apr. Note also new property construction fell -22.6% ytd y/y.
• The jobless rate was steady at 5.2%, although the China Stat Bureau stated youth employment pressures remain relatively high.
• In terms of the detail - IP showed strength in cars and chips, but weakness in mining and raw material related sectors. Electricity production eased back to 5.6%, from 6.1% prior.
• For retail sales, slower y/y momentum was evident across the board, with signs of easing momentum in post re-opening related sectors. Restaurants/Catering eased back +35.1% y/y, from 43.8%, while spending on construction materials fell further to -14.6% y/y from -11.2%.
• For FAI, weakness was particularly evident in the private sector (-0.1% ytd y/y), while state owned FAI eased to 8.4%.