China's IP growth improved slightly to 5.9% y/y in April from 5.6% in March, reflecting the resumption of production after the late Lunar New Year in 2015. However, the April reading was still weak, lagging the 6.4% y/y achieved in Q1 and market consensus of 6.0%. This mirrors the weak new orders sub-indices in both the official PMI and the HSBC PMI.
The real activity index - which tracks production growth in steel, electricity and cement - shows that actual growth momentum was even weaker than the headline IP number suggests. Electricity production grew only 1% y/y, steel production grew 3.4%, and cement production contracted 7.3%. Industrial products delivered for export fell by 2.9% y/y, compared with growth of 0.9% in March, suggesting weak export momentum.
Sluggish IP growth suggests that the ongoing slowdown in investment, particularly property investment, has weighed further on domestic demand.
