BEIJING — China’s factory output growth was surprisingly muted in April, darkening the outlook for the Chinese economic recovery and feeding expectations that the government may take policy action to support activity.
Reuters
Annual industrial output grew 9,3% in April, up from a seven-month low of 8,9% hit in March, but still missing market expectations for a 9,5% expansion, data showed yesterday.
“Economic activity is weaker than expected. This could reinforce the case for the central bank to cut interest rates,” said Zhou Hao, an economist from ANZ Bank in Shanghai.
Fixed-asset investment, an important driver of China’s economy, also missed market forecasts, growing 20,6% in the first four months of 2013 compared with the same period a year ago. Economists had expected growth of 21%.
Retail sales was the only piece of data that met market expectations, growing 12,8% in April from a year ago.
For investors, the big question now is whether China’s growth recovery is still on track.
Just a few months ago, investors had lauded the world’s second-biggest economy as being in a sweet spot of benign inflation and rebounding growth.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
But hopes that China’s economy is recovering from last year’s slump, its worst in 13 years, took a beating after growth unexpectedly cooled in the first quarter.
April’s output figures follow surprisingly buoyant trade numbers for the month, which many economists suspect are inflated by firms’ attempts to sneak funds into China past its capital controls. They say true export growth was likely more moderate.
On the other hand, a slightly quicker-than-expected pick-up in consumer inflation in April suggested Beijing does not have quite as much room as it might desire to relax monetary policy should growth swoon.
The mixed bag of economic figures from China this month should encourage investors to look at data from the real economy for clues on the state of growth. The country’s power output numbers for April, for instance, are due today.
Analysts have struggled to track the turns in China’s economy in the past year, often proving to be too upbeat.
Predictions that a mild economic recovery was under way this year proved overly optimistic after growth sputtered between January and March. Calls in 2012 for a growth rebound were also nine months too early, materialising only in the fourth quarter.
