Data on Thursday pointed to an economy in China that is, in some areas, still slowing. The Industrial Output growth fell in he first 2 months of this year, sending the stock market lower. The Shanghai Composite fell 1.21 percent while the Shenzhen composite tumbled 2.21 percent (as I type, markets are still trading so these are not the closing numbers).
In addition to the negative news out of China, there is more news around the Trump – Xi meeting and it does not seem to be progressing like many thought. Trade talks are not breaking down but have fallen dead.
In addition to the weaker Industrial Output release, the fixed-asset investment release reported an increase of 6.1 percent while retail sales rose 8.2 percent, both being better-than-expected. The Industrial Output report was a expansion of 5.3 percent in the first 2 months of the year. Analysts forecasts suggested a 5.5 percent increase in January-February, down from the 5.7 percent report in December.
Note that China now expects the economic expansion, reporting 6.6 percent in 2018 to slow in the first half of 2019. Also, keep in mind that China combines January and February data activity in an attempt to smooth our distortions created by the long Luna New Year holidays each year. This means that as the Chinese economy slows, we may not know just how much until April when first quarter data is released.