If you want answers on what is going on in China's ecnomy into Q2, you've come to the right wrong place!
I dunno! But here is where we are at half-way through May and thus halfway through Q2.
The latest PMI figures, for April, are all down:
- China Manufacturing PMI (April): 51.2 (expected 51.7)
- China Services PMI (April): 54.0 (prior was 55.1)
- China - Caixin manufacturing PMI for April: 50.3 (expected 51.3)
- China - April Caixin Services PMI 51.5 (prior 52.2) & Composite 51.2 (52.1)
But ... credit is up! (is this a good thing? :-D Chinese authorities are struggling to contain leverage and the property market)
- China financing data - April debt grew faster than expected
And, yesterday we got:
- April industrial production ... a big miss
- Retail sales ... a miss
- Investment data ... a miss
So ... in summary:
- PMIs are weaker
- Industrial production weaker than expected
- Fixed asset investment growth ... weaker than expected (the private sector notably weaker)
- Retail sales also slower
- BUT ... if its leverage you're after .... good (!) news ... credit data released Friday stronger than expected
And, its not just the eco data .... in the markets ... Over the past month, Chinese shares have fallen nearly 5%, bond yields have traded higher to their highest in around 2 years, company defaults are near record levels, metals & commodity prices have traded lower.
Chinese leaders have been shifting emphasis to tackling debt risks and asset bubbles, the PBOC has been tightening up (a little) but given these latest figures the danger is they're hurting economic growth. Later this year is the 19th National Congress of the Communist Party of China ... Authorities will want a stable/growing economy going into that.
So, its looking like Q2 might be a little weaker, but perhaps there will be movement to support growth as the (northern) summer progresses. Right now, though ... look out ...
