On Tuesday (May 16), China's National Bureau of Statistics released Theur data on Retail Sales. It could be seen that the numbers jumped by 18.4 percent on an annual basis in April.
Although still below the expectations of 21%, this time growth is much better than the previous period which increased by 10.6% only. Analysts argue that the increase in April Retail Sales data does not fully reflect the rapid increase in market demand.
However, it rather is due to comparisons with the previous year's data which experienced a sharp decline. Meanwhile, China's Industrial Production increased from 3.9% to 5.6% in April.
Despite the raise, the growth of data measuring the activity of the manufacturing, mining and utilities sectors failed to reach the 10.9 percent growth projection.
China Fixed Asset Investment Data Increased
Meanwhile, the China's Fixed Asset Investment data that was also released this morning, saw a 4.7% year-to-date increase in April. This figure slowed compared to 5.1% growth in the previous month.
Besides that, it was also lower than the expectations of a 5.5% raise. For your information, Fixed Asset Investment data is known as an essential indicator of capital goods, infrastructure, and business expenditures in China.
The Growth has been fairly stable since last year and it was caused by the government intervention in providing economic stimulus. In general, people think China's economy continued its recovery in April.
It was as supported by several positive factors that are increasing. However, the analysts still need to be aware of the international dynamics that seem to be increasingly complex and severe.
Domestic Demand is still not Solid
The domestic demand has not been very solid, nor have other economic drivers that are considered fragile. This was said by an NBS statistician.
According to the expert, China's next step is to focus on actively restoring and expanding domestic demand. Besides that, they have to accelerating the construction of a modern industrial system.
Another action to do is for promoting more effective quality improvement to achieve the 5.2 percent economic growth target. The economy situation is trying to recover this year after being hit hard by pandemic restrictions last year.
However, the publication of a number of fundamental data recently shows that recovery momentum is waning due to falling domestic and foreign demand.
Elsewhere, USD level is Better
The US dollar index or also known as DXY slipped to the range of 102.20 before in the European session. However, then it moved to the 102.50s after the release of US retail sales data in the New York session (May 16).
Retail sales data missed expectations, but the performance was still positive and supported the USD rate. In addition, the market is waiting for government debt ceiling negotiations this week.
The American retail sales rose by 0.4% in April 2023, or just half of the 0.8% gain expected by consensus. Annual retail sales growth was recorded at 1.60% only.
That number was weaker than consensus expectations pegged at 4.20%. Those were poor, but the market responded more positively due to the much bleaker March 2023 data revision.
Business Confident Indicators are Weaker
March 2023 retail sales data was revised down from -0.6% to -0.7% for month m-over-month. This was as well as from 2.94% to 2.42% (year-over-year).
This April retail sales data is a rebound after two weak months, signaling that consumer spending is still resilient. It was said by Vassili Serebriakov, an FX strategist at UBS.
Besides that, the analysts have expected the business confidence indicator to be weaker than the consumer indicator. So far, This report is consistent with that.
Most of the GDP of the United States comes from the contribution of consumer spending. That is why; the resilience of this sector has a positive impact on the US dollar.
