China economic momentum slows down in first quarter

Bloomberg

The first peek into China’s economy this quarter shows momentum cooling slightly as a real-estate frenzy and months of producer-price gains may have peaked. Confidence of small- and medium-sized enterprises, a gauge of manufacturing based on satellite imagery and a steel sentiment index edged down in April. International financial market experts remained confident in the future of the economy, while a sales manager index remained elevated.
The economy expanded faster than expected in the first quarter, driven by surging factory prices and accelerating investment that defied last year’s pessimism. Stricter property-market curbs and slower producer-price gains cast doubt on the durability of the revival.
Standard Chartered Plc’s Small and Medium Enterprise Confidence Index eased to 58 this month from 60 in March. “The outlook turned less positive,” economists Yan Se and Ding Shuang at the bank wrote in a note. “Tighter monetary policy and stricter financial regulations may continue to make SMEs’ access to both bank and non-bank funding difficult.”
Global financial market experts are increasingly optimistic about China’s growth, according to a survey of China Economic Panel, a joint project of The Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai. The reading for expectations rose for the third month in a row to 17.1 in April from 14.2 in March, and a gauge for the current situation surged to 17.6 from 3.3, the most positive assessment since the introduction of the survey in 2013, according to the panel.
“We could see the Chinese economy move back into calmer waters with a return to the usual high growth rates,” said Michael Schroder, a senior researcher in the ZEW.
The factory surge may have peaked, according to the China Satellite Manufacturing Index, which edged down to 51.3 this month from 51.8 in March. The reading from San Francisco-based SpaceKnow Inc. uses commercial satellite imagery to
monitor activity across thousands of industrial sites. Readings above 50 signal improving conditions.