Disappointing Chinese Data to Kick Off the Week

May 16, 2022

Investors got some bad news from April Chinese economic data and the European Union’s spring forecast.

Equity markets closed down 0.3% in China, South Korea, and India but up 0.5% in Japan and 0.3% in Australia. The German Dax and Paris Cac are down 0.6% and 0.4%, and U.S. stock futures have dropped, too.

Ten-year European sovereign debt yields have risen nine basis points in Italy, eight basis points in Greece, seven basis points in Spain, six basis points in Germany, five basis points in France, and four basis points in Britain. The ten-year U.S. Treasury yield is only one basis point higher, and the Japanese JGB yield of 0.23% is steady.

Gold and WTI oil prices are down 0.4% and 0.6%. Bitcoin’s price couldn’t hold $30,000 and has plunged 4.4% so far today.

The DXY weighted dollar index, which set a multiyear high on Friday, is 0.1% softer on balance. The dollar shows overnight advances of 0.9% against the Turkish lira, 0.5% versus theAussie dollar, 0.3% relative to the Swiss franc, 0.2% against the kiwi and sterling and 0.1% relative to the Japanese yen but has dropped 0.1% against the euro and 2.3% versus the Russian ruble.

Chinese retail sales posted a year-on-year drop of 11.1% in April, the most in 25 months and almost twice what analysts were expecting. Year-to-date sales turned negative with a 0.2% dip versus January-April 2021.

Chinese industrial production, which had been expected to record a modest 12-month rate of rise, instead posted a 2.9% drop last month. Output had risen 9.6% on average in 2021 but only 4.0% on year in January-April 2022.

China’s unemployment rate rose to a 26-month high of 6.1% in April from 5.8% in March and 5.1% in December.

Fixed asset investment in China had started 2022 with a solid 12.6% on-year advance in January-February, but its year-on-year average increase over the first third of the year slowed to 6.8%.

The EU’s new growth and inflation forecasts are out. The spring forecasts revises projected euro area growth in 2022 do2n 1.6 percentage points to 2.7% and anticipates growth of 2.3% in 2023. CPI inflation this year is now expected to be 6.1%, up from a projection of 2.2% announced last autumn. The inflation forecast for 2023 was doubled to 2.7%, still well above target.

Russia’s invasion of Ukraine had a devastating impact on Euroland’s balance of trade, which swung from a surplus of EUR 56.7 billion in the first quarter of 2021 to a deficit of EUR 52.4 billion in the first quarter of this year. The seasonally adjusted deficit of EUR 17.6 billion in March was its largest since the euro was lauched in 1999, and month-on-month growth in imports (3.5%) exceeded export expansion by a factor of four.

German wholesale price inflation rose to yet another record high of 23.8% in April from 22.6% in March, 16.1% in December and 7.2% in April 2021.

Producer price inflation in Japan also hit a record high in April, 10.0% versus 3.7% in the prior year through April 2021. Amplified by yen depreciation as well as the soaring cost of energy, import price inflation has soared to 44.6%. A separate Japanese data released today revealed a slower 25.0% on-year increase of machine tool orders versus 30.2% in March and an on-year rise of 120.9% in April 2021.

Czech producer price inflation rose 1.9 percentage points to a 363-month high of 26.6% in April.

Croatian consumer price inflation jumped to a record high of 9.4% in April from 7.3% in March and 2.1% in April 2021.

Ireland’s construction purchasing managers index slipped 1.4 points to a one-year low of 52.5.

New Zealand’s service sector purchasing managers index dipped 0.1 point to a 2-month low of 51.4 last month.

Turkey’s current account deficit in March of $5.554 billion was 3.6 times wider than the deficit a year earlier.

A 0.1% dip of Danish GDP last quarter was the first contraction in a year.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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