Although April data flattened somewhat on dissipating low-base effect, headline growth versus the previous month was favourable.
Industrial activities held up well. On MoM basis, it grew by 0.52%. Production of machineries and medicine saw more appreciated growth. Amid the ongoing green initiatives, that of alternative fuel vehicles soared by 175.9% YoY. Leading indicators such as official and Caixin manufacturing PMIs recorded continued expansion. Global economic recovery will boost the export-led industrial production. Composites PMIs for trading partners such as the US and Eurozone hit years highs. China’s trade surplus YTD soared by 85.7% and 176.2% compared to same period in 2019 and 2020 respectively.
Retail sales increased by 0.32% over the previous month on strong consumption sentiment after COVID-related restriction were further relaxed. Domestic travellers during the Qing Ming Festival Holiday already reached 90% in 2019. Non-necessities such as jewellery shot up 48.3% YoY, pointing to a buoyant consumption sentiment. F&B also leapfrogged by 46.4%.
Looking ahead, retail sales will likely sustain amid the absence of outbound travel. Domestic travel reached 230mn people during week-long Labour Holiday, representing a 119.7% YoY growth, and is 3.2% higher than that of the 2019 labour holiday week. Improving labour market condition also helps. Latest disposable income data (1Q) saw a 13.7% YoY jump (14.6% higher than 1Q19). Services PMI, an early indicator that largely mirror retail sales performance, stayed in the expansion territory for 12 months.
Against the strong growth momentum, fixed asset investment (YTD) saw stronger MoM growth of 1.49%. Private investment rose by 21.0% YoY YTD, compared to 26.0% in March. SOEs by investment also increased by 18.6%. By industry, manufacturing investment was well supported by the strong industrial production. Anchoring the start of special bond issuance (jumped by 655.4% MoM), infrastructure investment rose by 18.4%. Meanwhile, the growth rate of computer & telecommunication, at 30.8% in April, remained higher than the headline FAI amid Beijing’s effort in technology self-sufficiency.
The positive outlook paved way for monetary policy normalisation and the curb on excessive borrowing. M2 slumped to 8.1% YoY in April from 9.4% in March despite PBOC adviser Ma Jun indicated that the growth in the broad money supply in 2021 should be kept at about 9%. Aggregate financing extension slowed to 11.7% from 12.3% on tapering of both loan and shadowing banking growth. Meanwhile producer inflation continued to accelerate. PPI rose 6.8% YoY in April on surging commodity prices, up from a 4.4% rise in March. Although pass-through to consumer price was limited thus far (CPI rose by 0.9% only), recovery in consumption sentiment will spur stronger inflation in months ahead. However, fear over further tightening may be overdone. The authority may slow down its withdrawal given the faster-than-expected drop in credit growth in April. The 1Y Loan Prime Rate to be announced that week is therefore expected to stay at 3.85%.To read the full report, click here to Download the PDF.
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at [email protected] for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-878-9999. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.