Several data published on Sunday confirmed evidence that Chinese economy lost growth momentum in May. Domestic demand especially private and public investments failed to compensate the fall of exports as factory output increased 9.2% YoY in May down from 9.3% in April and urban fixed assets investment reached 20.4% Ytd (8-month low).
More details from Business Insider:
“First, industrial production climbed 9.2% on the year, slightly below expectations for a 9.4% rise. Industrial production in May was led by heavy industries, with steel products up 11.3% year-over-year (YoY), up from 8.1% in April. Auto production slowed to 15.7%, from 18.3%, according to Bank of America’s Ting Lu.
Second, fixed asset investment (FAI) was up 19.9% on the year, and year-to-date FAI was up 20.4% on the slightly below expectations for a 20.5% gain. Remember FAI is a good gauge of a country’s investment activity. A breakdown of FAI activity showed that manufacturing FAI eased to 16.5%, from 17.9% because of “sluggish” external demand. Railway FAI slowed significantly to 24.2% YoY, from 62% in April. But year-to-date railway FAI was up 24.5%, compared with -41.6% last year for the same period. Planned investment, which is a leading indicator of FAI eased to 15.4%, from 17.9%. And finally, property FAI fell to 19.4%, from 23.2% the previous month.”
Finally, note that in a context where CPI and PPI also slowed in May to respectively 2.1% YoY (against 2.4% YoY in April) and -2.9% YoY (against -2.6% in April), PBOC could only choose to lower exchange rate (Yuan/USD at all time high) because money supply increased by 15.8% YoY in May (above the official target of 13%) and housing prices have rebounded sharply since last summer.