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Asian Focus: More signs of China slowing but easing still way off
In this Asian Focus Video, Yvette Roper of TradingFloor.com interviews Andrew Robinson, Correspondent for Saxo Capital Markets in Singapore reviews April trade balance figures out of China and previews other key data for the month which points to continued slowing in the world's second-largest economy. He also reviews the latest employment figures from Australia which seem to be surprisingly robust but a closer look reveals a different story.
China’s trade balance data for April was hardly all good news despite a higher-than-expected increase in the surplus. Much of the improvement came due to the lowest level of imports in more than a year (excluding lunar New Year distortions), while exports grew at a much lower than expected pace.
The report was especially negative for the Australian economy as reduced imports into China (Australia’s largest trading partner) suggest that demand for Australian resources will slow. The low level of imports suggest the requirements for the Chinese economy are slowing down and as a result there’s a risk of lower industrial production data for April, due Friday, says Andrew.
Also on Friday Chinese retail sales for April are expected to come in flat at around 15.3 percent year on year versus 15.5 percent last year. As a result of this and the overall economic backdrop in China any expectations that domestic consumption will take off there soon are being put on the back burner a bit simply because the logistics of the domestic economy are very difficult to move and it’s going to be a very long and drawn out process, says Andrew.
Friday will also see the release of Chinese CPI data for April. A slightly lower inflation rate of 3.4 percent is the consensus estimate, down from 3.6 percent in the previous month. Food plays an important part in the compilation of the basket of Chinese data and this time in particular the volatile food prices in vegetables and pork are also seen playing a major role. Regardless of the outcome though, and the weaker trade data, the wait for any stimulus or easing measures in China will take a few more months at least, estimates Andrew.
In Australia, a jobs report for April surprised on the headline number with 15,500 jobs added to the economy and an overall unemployment rate of 4.9 percent, the lowest in a year. Closer analysis however revealed that most of the jobs were added in the part-time category while the number of full-time jobs declined, so that part of the headline is not quite as strong as it suggests, says Andrew. The report initially had a positive effect on the Australian dollar but expectations for an interest rate cut at the next Reserve Bank of Australia meeting in June have now dropped to a 50-50 bet from a 70-30 one just a week ago, he concludes.
See more of Andrew's Asian market commentary on TradingFloor.com
05:41 minutes
Tags: andrew robinson, asia, audusd, australia, australianeconomy, china, chineseeconomy, cpi, employment, forex, industrial production, inflation, retail sales, trade balance, tradingfloor.com, unemployment, yvette roper