Data in the Coming Week Shows Signs of a Steadying Economy

Data in the Coming Week Shows Signs of a Steadying EconomyA surge in Chinese data over the coming week is likely suggesting signs of a steadying of the second largest economy in the world, although economist are still expecting the government to dole out more stimulus and measures to support growth. Industrial output and retail sales are expanded at a better pace in April as fixed assets investments growth is holding steady.

But property market is a drag on the economy and is likely to remain weak and erratic global demand continues to depend on exports. Even with signs of stabilization, any real activity have remained weak with faltering purchasing managers index new orders and paired with a rapidly declining producers prices that is pointing to  a frail domestic demand and a bad corporate balance sheet. This means even with the slide in the real activity in March is likely to be arrested and further policy support would be needed if the target growth of 7 percent is to be reached this year.

The central bank is expected to cut interest rates once again in he past two months and cut bank reserves requirement ratio by another 100 basis points. Factory growth output in April will pick up to 6 percent from March 5.6 percent which was the weakest reading since, while sales growth in retail have quicken to 10.5 percent compared to March 10.2  percent. Fixed asset investments is also expected to increase 13.5 percent in the first quarter. While export growth rebounds to 2.4 percent in April from a 15 percent tumble in March.

Annual consumer inflation is at 1.6 percent in April which is up from 1.4 percent in March but below the annual government target of 3 percent. A further sign of a sluggish demand and sustained pressure on profits margins at Chinese companies and producer deflation is expected to persists even with the producer price index is falling. The central bank also delivered two interest rates cut since November with the top of the two reductions in the amount of money banks keep in reserve and repeated attempts to reduce the financing costs.

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