China industrial production slows and retail sales disappoint

Chinese industrial production growth slowed as expected in April but retail sales disappointed, suggesting the world's second-biggest recovery faces a bumpier recovery path.

The National Bureau of Statistics said industrial production rose 9.8% from a year earlier, down from 14.1% in March and in line with a consensus forecast of 10%. Fixed asset investment slowed to 19.9% from 25.6% and was close to the 20% increase expected by analysts.

Growth of retail sales almost halved in April to 17.7% year on year from 34.2% and was below the consensus forecast of a 25% decline.

“The foundations for the domestic economic recovery are not yet secure,” Fu Linghui, an NBS spokesman, told a news briefing, Reuters reported. He said rising international commodity prices were emerging as a pressure on China's recovery.

“For companies as a whole, price increases are conducive to the improvement of corporate efficiency, but the pressure on downstream industries needs to be paid attention to,” he added.

China's economy has recovered strongly from the Covid-19 crisis in 2021 as export markets have opened up but April's figures suggest the rebound may be disproportionately weighted towards manufacturing over consumption.

Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said the figures indicated retail sales fell 4.5% month on month "which is not awful … though we had expected a stronger April outturn".

"Production will continue to face headwinds as trade corrects, with foreign demand drivers switching to services," Beamish said.

"Metro traffic continued to recover through the month, and the Caixin services gauge picked up. Admittedly, online sales softened, but that could merely have reflected people switching back to high street buying, Beamish said. "The uptrend, however, remains on track."