Message #22436

[Psalm 51:17]

China’s economy continues to cool off - Some analysts see cause for optimism amid otherwise bleak data
9 June 2012, by Chris Oliver and Sam Mamudi - Hong Kong (MarketWatch)
http://www.marketwatch.com/story/chinas-economy-continues-to-cool-off-2012-06-09

Excerpt:

Chinese economic data for May released Saturday showed a broadening deterioration in conditions, with the numbers coming on the heels of a surprise interest-rate cut meant to help the nation’s slowing economy.

China’s industrial production grew 9.6% in May from a year earlier, versus 9.3% growth in April, the Statistics Bureau said.

The result missed a 9.9% rise expected in separate surveys by Dow Jones Newswires and Reuters.

Fixed-asset investment in urban areas was up 20.1% in the January-to-May period, compared to a 20.2% rise in the January-to-April period.

The result outpaced expectations for a 20% rise, according to Dow Jones Newswires survey.

On the inflation front, consumer and wholesale price gains eased more than expected.

The May consumer price index rose 3%, cooling from a rise of 3.4% in April, while the producer price index fell 1.4%, signaling a deepening of the deflation seen in April’s 0.7% contraction.

The data compared to forecasts for a 3.2% increase for the CPI and a 1.1% contraction in wholesale prices.

“These data confirm a softening inflation in China, which will provide more room for further policy stimulus measures and utility price hikes,” said Bank of America Merrill Lynch analysts in an email to clients Saturday.

“Moreover, the widening gap between year-on-year CPI and [wholesale] inflation suggests that profit margin could be improved for downstream manufacturing sectors.”

The analysts predicted CPI could fall to 2.5% in the coming months, but suggested that, absent a global financial crisis, there could be a rebound after August “on lower bases and a recovery of growth.”

Meanwhile, retail sales rose 13.8%, compared to a 14.1% gain in April, and weaker than analyst expectations for a 14.2% rise.

Analysts on Friday had been bracing for a disappointing batch of data, cued in part by a surprise interest-rate cut Thursday by People’s Bank of China (PBOC), marking its first policy easing since the 2008 global crisis.