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China grows (really, it does)

| Posted by: Paul Donovan | Tags: Paul Donovan

  • China grew at 6.7% yoy in the first quarter. While there is often criticism of the quality of Chinese data, bear in mind how often numbers in the US and the Euro area are revised. The criticisms may be fair, it does not mean anyone else is any better.
  • The growth is credit fuelled (strong credit numbers this quarter), with construction stronger than expected. That has spill over into markets like Australia given the commodity intensity of construction. Is it sustainable? For now, but this is clearly above long term trend US growth.
  • The US offers us industrial production today – a real (volume) figure. This means that extrapolating too directly from manufacturing sentiment may be difficult – sentiment is also supposed to be real, but often seems more nominal.
  • Political issues are around for markets to consider. In Brazil the next stage of the impeachment process against President Rousseff takes place on Sunday. In the UK the EU referendum campaign starts, along with the rules governing the discussion of the vote.