South East Asia

China’s Latest Data Show Consumption Is Strong, Factory Output Slowing

China’s latest economic data are expected to show retail sales growth was unchanged last month, and factory output and investment decreased slightly for a second month.

According to Bloomberg, the data should reinforce expectations that economic growth will slow in coming months from the first quarter’s 6.9 percent expansion.

In good news, consumption in the country remains strong. Travelers checked in more at luxury hotels and spent more at restaurants in May – and spending rose across multiple categories last month, including home appliances.

However, vehicle sales fell 0.1 percent from a year earlier last month, compared with a 2.2 percent decline the prior month. Property sales also eased for a third month.

There are also signs that the factory engines are slowing. Despite the official manufacturing gauge staying at 51.2 for a second straight month, a manufacturing index based on satellite imagery slipped below 50 this month, signaling reduction 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.

“There are signs of the current mini-cycle peaking, although the slowdown has been very gradual and will likely remain so,” said Wang Tao, head of China economic research at UBS Group AG in Hong Kong.

Private surveys confirmed the softening, with Standard Chartered Plc’s Small and Medium Enterprise Confidence Index slipping to 56.9 in May from 58 in April, and a sales managers index from London-based research firm World Economics falling to a six-month low.

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