Thread by @PkZweifel

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Chinese activity data for April slowed, with most indicators contracting. Our Q2 GDP nowcast shows 3.6% q/q ann. growth, down from 5.9% in Q1. With an average of 4.8% over the first two quarters, the slowdown isn't significant enough to trigger the anticipated fiscal response, especially after recent monetary support.

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On the supply side, industrial production remains 5% above pre-pandemic trends, with slowing growth but still around 7% annualized over the past six months.

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On the demand side, consumption is driven by services (quarterly data), while retail sales fell in April, reducing six-month growth to 5% and maintaining a gap of over 10% from the pre-pandemic trend

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Investment spending also contracted in April but maintained six-month trends, slightly above average…

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… This is driven by manufacturing investments exceeding historical norms and infrastructure investments returning to their average.

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Residential investment remains at its lowest in over 15 years. On the bright side, residential demand has stabilized over the past year, no longer negatively impacting growth…

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… Additionally, unsold inventory has started to decline from historic highs, still far from the 13-month norm, but suggesting house prices may stabilize, with nearly a third of cities seeing price increases this month.

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No significant rebound in the property market is expected, as projections using four key factors indicate just 1.5% growth, well below overall GDP growth. This suggests the sector will continue to shrink in GDP size, currently at its 2004 level of 5.6%.

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Finally, total social financing (TSF) continues to expand, with growth close to 10% annually this quarter, resulting in a solid increase in credit impulse, around its highest level in five years…