China's factory output growth slowed in April, providing fresh evidence a day after poor export data that recovery in the world's third-largest economy is not yet on a rock-solid footing. But retail sales surprisingly accelerated, offering encouragement to policymakers that consumers are helping to compensate for weakness in the industrial sector.
The reports completed a mixed bag of April data thaat had something for everyone Optimists cited strong lending and investment figures to maintain that the government's target of 8 percent growth in gross domestic product this year is within reach, while pessimists pointed to the still-fragile manufacturing sector to argue that China is not out of the woods yet.
"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 chimed with a larger than expected 22.6 percent drop in China's exports last month and suggested factories may have jumped the gun in March by ramping up output and adding to inventories in expectation of orders that did not fully materialise. But 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.