Mixed signals from mainland economy
13-05-2009
China's factory output growth slowed in April, but the pace of retail sales growth surprisingly accelerated. "It is important not to attach too much importance to one particular data point and to recognise that any recovery in China is not going to proceed in a straight line," said Brian Jackson, an economist with Royal Bank of Canada in Hong Kong.
"Policy stimulus is having an impact on domestic demand, but weak external demand is still dragging down overall growth," he said. Growth in factory output slowed to 7.3 percent in the 12 months to April, below analysts' forecasts of a rise of 8.3 percent, which was also the reading in March.
The moderation was consistent with a 22.6 percent drop in China's exports last month and suggested factories may have jumped the gun in March by increaasing output and adding to inventories in expectation of orders that did not fully materialise. Zhu Baoliang, deputy director of economic forecasting at the State Information Centre, a government think-tank, called the rise of 7.3 percent "okay" and said it was no cause for concern.
"It means the manufacturing industry is still on the path of recovery. Industrial production is stabilising, but we may also see some short-term fluctuations due to inventory adjustments," he said.
