China’s growth momentum abated in April

HONG KONG - China has released monthly data of economic activities which show that April generally saw moderation in activities following a strong rebound in March. Infrastructure spending and the property sector continued to drive growth.

ANZ Bank says that while the consumption trend and contraction of the ferrous metal industry are consistent with Government plans for economic rebalancing and industrial policy, ANZ remains cautious of property prices overheating and a potential overleveraging in real estate – a major policy concern of top officials.
“We believe the PBoC will be less aggressive in considering monetary policy easing and will adopt a targetted approach. We stick to our forecast of just one reserve requirement ratio cut in 2016,” the bank says.
China manufacturing activities moderated in aggregate, though industry performances were mixed.
Industrial production growth declined to 6.0% y/y in April, down 0.8%. Sequentially, the IP expanded 0.47% m/m sa, compared with the exceptionally strong 0.63% in March and the 12-month rolling average of 0.49%.
However, industries performance was mixed. The growth rates of mining, general equipment, and ferrous metal declined by about 3% in April, while those of food, non-ferrous metals, and automobiles rose faster.
Investment also grew more slowly but infrastructure spending remained strong.
Growth of fixed asset investment dropped marginally to 10.5% in the period of January-April from Q1 2016’s 10.7%. Its month-on-month growth was also down to 0.72% m/m from March’s 0.86%.
However, infrastructure investment continued to rise strongly by 19% ytd y/y and represented 18% of total FAI, contributing 30% of the total growth. SOEs remained the growth drivers with their 23.7% ytd y/y pace responsible for 69% of total growth.  www.live.anz.com (ATI).