China’s patchy recovery from the COVID-19 pandemic continued in May with slightly better than expected investment production and retail sales.
Growth in China’s industrial production picked up in May, rising by an annual 4.4% (compared with 3.9% in April).
This was a substantial improvement from the deep declines recorded in February and March, but still slower than recent month to month performances before COVID-19 emerged.
Industrial production grew 4.4% in May, following the 3.9% expansion in April, China’s National Bureau of Statistics said Monday. May’s growth under a market forecast of 5.0%.
Retail and investment, however, but at a slower pace.
Retail sales dropped 2.8% in May from a year earlier, down from April’s 7.5% decline. Economists had forecast a 2.0% drop.
Urban fixed-asset investment slipped 6.3% in the January-May period after a 10.3% plunge over the first four months. Economists had expected a 6% fall for the first five months.
Highlights included motor vehicle output increasing 19% YoY in May (from 5.1% in April), while cement (up 8.6% YoY), electricity generation (4.3% YoY) and crude steel (4.2% YoY – see separate story).
Earlier inflation data showed a sharp fall in consumer prices, thanks to slowing rates of growth in food costs, but producer prices dipped deeper into deflation as demand continues to be spotty.
That, however, has meant a larger increase in real investment – up by around 8.2% YoY (from 4.4% YoY in April).
China’s trade performance confirmed the muted nature of the recovery – exports fell but imports plunged, producing the largest trade surplus on record of $US62.9 billion. The sharp fall in imports came despite rises in imports of oil, copper, and other key commodities.
Credit growth again surged in May – totalling RMB 3.2 trillion (following on from a RMB 3.1 trillion increase in April). Bank loans only accounted for around half of this increase, with large scale government bond issuance driving non-bank credit.
Real estate investment and sales in China both rose in May, pointing to continuing momentum as the property sector gradually recovers from the impact of the coronavirus outbreak.
Real estate investment in May rose 8.1% from May 2019, up from 7% growth the previous month.
For the first five months of the year, property investment fell 0.3% on the year, far less than the 3.3% slide in the January-April period.
