Upbeat March data had sparked hopes that China's economy was picking up, but much of the data in April, which included weaker-than-expected exports and imports, plus soft factory activity surveys, continued to underline lingering weakness in the broader economy. China’s economy was back to its malaise in April.
China's activity indicators lost momentum in April. Investment, factory output and retail sales all grew more slowly than expected. Industrial production growth slowed to 6.0% y/y, fixed asset investment growth dropped marginally to 10.5% in Jan-Apr period from Q1’s 10.7% and retail sales edged down 0.2ppt to 10.1%.
CPI inflation remained flat at 2.3% y/y in April, unchanged for the second consecutive month, while PPI deflation narrowed, falling 3.4% y/y, compared with the 4.3% drop in the previous month. New yuan loans surprised on the downside in April at RMB555.6bn, compared with RMB1.37trn in March. Total social financing also slowed to RMB751bn in April, much lower than RMB2.34trn in the previous month.
The only bright spot was investment in housing, which grew 9.7 percent in April from a year earlier. 65 of 70 cities saw rising home prices in April, compared with 62 the previous month.
“It appears that all the engines suddenly lost momentum, and growth outlook has turned soft as well. At the end of the day, we have acknowledge that China is still struggling,” Zhou Hao, economist at Commerzbank in Singapore, said in a research note.
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