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Bloomberg
China’s next batch of economic data is expected to signal that consumption remained steady while industrial momentum softened a bit in the world’s second-largest economy.
Data on Wednesday will show retail sales growth was unchanged last month while growth in factory output and investment both edged down for a second month, economists say. That would reinforce expectations that economic growth will slow in coming months from the first quarter’s 6.9 percent expansion.
Retail sales rose 10.7 percent from a year earlier for a second month in May. Factory output rose 6.4 percent on year, compared with 6.5 percent in April. Fixed-asset investment growth in urban areas edged down to 8.8 percent in the first five months of the year from 8.9 percent in the first four months.
While forecasters see full-year growth exceeding the government’s 6.5 percent objective as trade and the global economy pick up, some gauges show activity faltering. Authorities tightening regulations to reduce risk in the financial system have also boosted interbank borrowing costs, weighing on the outlook for the credit that supports the economy.
“There are signs of the current mini-cycle peaking, although the slowdown has been very gradual and will likely remain so,†Wang Tao, head of China economic research at UBS Group AG in Hong Kong, wrote in a recent note, referring to the economy.
Private surveys confirmed the softening. Standard Chartered Plc’s Small and Medium Enterprise Confidence Index slipped to 56.9 in May from 58 in April, and a sales managers index from London-based research firm World Economics slid to a six-month low. Global financial market experts also were much less confident, according to a survey of the China Economic Panel, a joint project of The Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai.
Factory engines are slowing. Despite the official manufacturing gauge holding at 51.2 for a second straight month in May, a manufacturing index based on satellite imagery slipped below 50 this month, signaling contraction for the first time since August. A private factory gauge also fell below 50 in May, adding to evidence that the year’s robust start has leveled off.