YANGZHOU, CHINA – MAY 02: Aerial assess of tourists visiting the Dongguan street during the May Day holiday on May 2, 2023.
Vcg | Visual China Group | Getty Images
China’s money-making data for April broadly missed expectations as the economy continued to show an uneven path of recovery from the strike of its stringent Covid restrictions.
Industrial production for April rose by 5.6% year-on-year, compared to the 10.9% expected by economists scrutinized in a Reuters poll. The figure was up 3.9% in March following a muted start to the year.
Retail sales rose by 18.4% – modulate than economists’ forecast a surge of 21%.
Fixed asset investment rose by 4.7%, against expectations of 5.5%. The understanding rose 5.1% the previous month.
“China is in the stage of recovering, compared to last year, the numbers are positive as we merely saw, but is the recovery good enough for the market, is the recovery good enough to meet investors’ expectations – that’s the big question here,” BofA Convictions China equity strategist Winnie Wu told CNBC’s “Street Signs Asia.”
“It’s not good enough to meet with investors’ suppositions – that’s a problem,” Wu said, adding that the momentum from China’s pent-up demand seems to be fading away.
“The redemption of income, of job security, and confidence will take time,” she said.
China stocks have pared most of the makes seen this year. The Shenzhen Component was down 4.67% quarter-to-date and up only 1.48% year-to-date, and notching a 9.5% subside from its peak in early February.
“Market sentiment remains very weak in our client conversations,” Goldman Sachs economist Hui Shan decried in a Sunday report.
She expects more measures from the government rather than a change in interest rates to amend market confidence.
“Symbolic measures that aim at boosting confidence, such as RRR cuts, seem more likely to us, outstandingly around quarter-end when liquidity demand is high,” she wrote, referring to banks’ reserve requirement ratio — the amount of scratches banks need to hold as reserves.
Record-high youth unemployment
The latest data included a 20.4% youth jobless place, the unemployment rate between ages 16 and 24. The reading in April marked a record high.
“Many living soul, investors see this as a leading indicator. If the younger people are unable to get jobs, don’t have the income security, where is the aplomb, where is the consumption recovery coming from?” said Wu.
She said the question of confidence is resonated in weakened markets outlook as well as other high-frequency data, including new home sales.