Two-speed China confirmed
More data out in the Chinese economy showing that the internal difficulties remain while external demand is buoyant.
Industrial and manufacturing outputs were mainly driven by external demand. But domestic demand remains a concern with retail sales increased by 2.3% in April, the slowest increase since December 2022, and far short of the 3.8% rise anticipated by economists. While China's economic recovery remains it will be clear to many that policymakers must continue policy support to prop up growth. Separate data published this morning showed new home prices fell at the fastest pace in over nine years in April, by 9.8% YoY, still a drag on the overall economy.
(Video Transcript)
Now, there's been some mixed data up overnight in China, but some standout highlights which have driven a really good rise recently in the price of copper. I want to talk about industrial action. First of all, rising 6.7% year on year in April, a step up for the 4.5% rise in March and above expectations of a 5.5% increase. So these are really good numbers coming through.
Industrial and manufacturing output
Industrial and manufacturing output, so mainly driven by external demand, but domestic demand remains a concern within China. This two speed economy. Retail sales increased by 2.3% in April. Now that was up, but nonetheless the slowest rate of increase since December 2022 and far short of the 3.8% rise anticipated by economists. Let's take a look what's been happening on the foreign exchange above second and above gains for the US dollar against that weaker Chinese currency.
And so China's economic recovery remains and policymakers must continue to support to prop up growth. Separate data published this morning showing new home prices fell at the fastest rate in over nine years in April. Again, another reason to sell this Chinese currency against a stronger US dollar. But I think for me, the major part of all this is what's happening with base metals and this external demand for China.
The price of copper
It doesn't matter where it's coming from. Industrial number's looking good and they need a lot of copper and this is showing through now in the price of copper. This is the highest print of copper that we've seen in this market since. We've got to go way back now to March 2022 for the price of copper, substantially about the 10,000 level, 10,522 is over trading on this LME copper price on this Friday 17th of May.
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