With the yuan at its strongest since devaluing in 2015…
and lunar new year distortions starting to wash out of the macro-surprise data… (Monthly data for January and February are often plagued by shifts in the lunar new year holidays in China. For today’s March numbers, we should really be past that — although last week’s trade numbers still had a surprise impact.)
Tonight’s smorgasbord of Chinese economic data is the first glimpse of the state of the economy as the credit impulse slipped negative and the crackdown on shadow banking (and implicitly leverage) began.
Commodities are leading the China bubble for now, with bonds and stocks having been bubbled-through…
And China stocks (red) are notably underperforming their Asia-Pac peers (green)…
So, the markets need some hope to cling to and so we strongly doubt GDP will be allowed to miss. Bloomberg notes that the backdrop to today’s data is that China is broadly expected to slow somewhat this year, after last year it saw the first acceleration in growth since 2010, when China — and the rest of the world — was bouncing back from the global recession.
China Q1 GDP YoY MEET at 6.8%, versus +6.8% exp. and +6.8% prior.
China Retail Sales YoY BEAT at 10.1%, versus +9.7% exp. and +9.4% prior.
China Industrial Production YoY MISS at 6.0%, versus +6.3% exp. and +6.2% prior.
China Fixed Asset Investment YoY MISS at 7.5%, versus +7.7% exp. and +7.9% prior.
Notably, China Q1 GDP QoQ disappointed however, rising only 1.4% QoQ (versus expectations of a 1.5% QoQ jump…
So the initial sign is some softening in the industrial part of the economy, and strong growth in the consumer side.
This one will disappoint President Trump: Steel production still growing…
First Quarter Crude Steel Output Rises 5.4% to 212.15M Tons
March Crude Steel Output Rises 4.5% Y/Y to 73.98M Mt
March Steel Product Output Rises 4.2% to 89.77M Tons
Bloomberg’s Chris Anstey notes that on the softening in industrial-output growth, Goldman Sachs economists had warned that weather conditions in March weren’t favorable for reducing pollution — so authorities probably put more restrictions on production, construction, and transportation.
Additionally, a new indicator – the monthly survey-based urban unemployment rate will be introduced today, providing a reading on China’s labor market.
The NBS may start publishing China’s monthly surveyed unemployment rate …read more