Ignoring China’s record crude steel production last month (see separate story), the monthly economic activity data drop yesterday shows clear signs of a slowdown as the attack on debt and shadow financing saw short term interest rates rise and commodity prices tumble.
“The data was all weaker than in March,” said Standard Chartered Bank Ltd. economist Ding Shuang, “April is likely to be the turning point for the rest of the year,” he told the Wall Street Journal.
Growth in China’s retail sales, investment and industrial production all softened in April, indicating a weak start to the second quarter despite apparent resilience in domestic lending activity.
Industrial production saw a marked retreat in April, dropping 0.9 percentage points to a year on year growth rate of 6.5%, well below expectations of 7.1 per cent.
China’s Bureau of Statistics said the softening was particularly pronounced at larger enterprises, where sales growth dropped to 9.2% from a pace of 10% in March.
Online sales growth for the year to date accelerated marginally to 25.9%, compared to growth of 10.2% in total retail sales for the four months ended April.
And urban fixed-asset investment grew 8.9% year on year in April, down from growth of 9.2% in March and falling short of market forecasts for a 9.1% rise.
Investment by state-controlled firms saw a slight rebound to 13.8% growth for the year to date, while private investment growth for the period suffered a more significant slowdown to 6.9% growth compared to 7.7% in the first three months of 2017.
The softening of all three growth gauges comes despite credit data for April that showed new renminbi loans grew 7.8% month-on-month to Rmb1.1tn, while total social financing – the central bank’s preferred measure of liquidity – grew 12.8% year on year in April, up from 12.5% in March.
Real estate investment in China rose at the quickest rate in more than two years in April despite increasingly sluggish sales growth – but sales were weaker.
Investment in real estate development for the January-April period was up 9.3% compared to a year earlier, according to data from the National Bureau of Statistics.
That’s the fastest pace for the year so far as well as the quickest clip in year-to-date growth since February 2015.
New housing purchased in the first four months of 2017 came to 416.6bn square meters, up 15.7% year on year, 3.8 percentage points slower from the pace in the year ended March.
In value terms sales totalled Rmb3.3tn ($US478.2bn), up 20.1% from the January-April period in 2016 but down down 5 percentage point slowdown from the prior year.
Those figures suggest housing price averages from 70 major cities – due out later this week – are likely to come in on the softer side.
Property sales also fell sharply in April year on year, increasing at their slowest pace in over two years, and construction starts weakened.
