China Weekend Economic Data: Weaker Industrial Production, Retail, and CPI

As if you had not guessed that China’s weekend releases of economic data were going to be weak after that surprise rate cut late in the week, the tally is out and it is weak on all fronts.  The U.S. and other major industrial nations would kill for growth numbers like these.  China just requires higher numbers from the National Bureau of Statistics of China for the world to be growing more.

Industrial Production rose 9.6% during the month of May in China.  The good news is that it was up from the 9.3% reading in April. The bad news is that April’s 9.3% was the lowest reading in almost three years.  More bad news is that Dow Jones was calling for 9.9% growth.

China’s retail sales rose by 13.8% year over year in May to 1.67 trillion yuan (almost $265.1 billion U.S.).  The reading in April had been 14.1%.   Property development investment was said to be up 18.5%, versus expectations from Dow Jones of 18.2%.

The good news is that consumer price index rose 3.0% in May, and that is down from 3.4% in April and under the 3.2% projected by Dow Jones.  This leaves more room to cut rates if China chooses to do so.  Producer Prices were down by -1.4% in May versus -1.1% expected.

Earlier in the week we saw that China’s manufacturing purchasing managers index (PMI) was 50.4% in May, which was down by 2.9 percentage points month-on-month.

Data of this sort might not sound like much of a panic enough for an unexpected interest rate cut, but China wants to make sure that its growth picks back up now that the inflationary data is lower.  This is the globalized world we live in.  Unfortunately we all now have to care about growth in China.

JON C. OGG