Manufacturing output expected to be subdued
Weak demand likely restrained investment and factory growth last month, analysts say
Growth in mainland investment and factory output probably remained listless in May on soft domestic demand, a Reuters poll showed, heightening risks that the Chinese economy may cool further in the second quarter.
Those hoping for exports and imports to be a bright spot are likely to be disappointed, too, as a sharp loss of momentum is expected, though analysts expect the slump will be exaggerated by what was suspected to be an artificially strong trade performance in April.
Dismal readings from the latest batch of Chinese data in coming days would further bruise market confidence in the world’s second-biggest economy, where expectations are mounting that growth in 2013 could slide further from last year’s 13-year trough.
“The key driver of growth is domestic demand and investment,” said Zhang Zhiwei, an economist at Nomura. “If industrial production continues to slow, it would point to a further slowdown in the second quarter.”
Zhang expects growth in the world’s second-biggest economy to decelerate to 7.5 per cent between April and June, from 7.7 per cent in the first quarter.
A Reuters poll of 20 analysts showed growth in fixed-asset investment, one of two main drivers of the mainland economy last year, likely rose 20.5 per cent in the first five months of this year compared to the period last year.
That is equivalent to investment rising 20.2 per cent in May from a year ago, Reuters’ calculation showed, the slackest pace in at least three months, and a level last seen in August, excluding January and February when monthly data was unavailable.