a slow slowdown.pdf

A SLOW SLOWDOWN 26 June 2007 What Happened in May ? Mixed But Looks Like A Slowdown ? Steel Output Growth at Three-Year Low: % ? Car Sales Rose 23%: But Needed Price Cuts ? Cement Accelerating: 18% Higher y-o-y ? Textile Exports Growth Again %: Under Half 06 Growth ? Yarn Up %. Cloth % Higher, Garments % ? Energy Production Up % v. % in 06 ? Power Generating Equipment Growth % v. % in 06 ? Metal Smelting Equipment Down % ? Tyres Up % v 39% in 06 Consumption: Remains Very Firm ? Retail Sales Growth Hits Three-Year High of % ? Beer Up 12%, White Liquor Rose 31% ? Dairy Growth Again Hits Reality: Only % Inflation: Back On Screens ? CPI %: Gaining Visibility ? Food Rose %: Main Cause of Inflation, Temporary ? ? PPI Eased Slightly to %: Less Pressure on Margins Data To Watch: For Signs of Real Overheating ? Bank Loans: Growth Over 18% ? Fixed Asset Investment: Above 30% For Entire Quarter ? Industrial Output: Over 18% - Series Discontinued? ? Retail Sales: Over 16% As Beijing’s officials meet to consider what, if anything, they need do ahead of the second hal f it is worth lookin g at the picture that faces them. It is mixed, meanin g no great pressure to act. The most interestin g data released for Ma y is steel output growth of just %. This seems to confirm that overheating is not an issue. Officials should look at their own data on value added in industrial production, their proxy for industrial production, in the second chart below. ? Commodities ? Asian Equities ? H-Shares mendations Please contact: Hugh Peyman at ******@research- or at 86-21-5887 6060 with any questions ments. Accelerating Retail Sales 5M02-07 Source: CEIC % Change 7 10 13 16 5M02 5M03 5M04 5M05 5M06 5M07 Slowing? Industrial Production 5M01-07 Source: CEIC % Change 10 12 14 16 18 5M01 5M02 5M03 5M04 5M05 5M06 5M07 At