While China’s 3Q GDP number was a little lower than expectations at 6.0% y/y the monthly production and activity series for September all improved. Retail sales growth picked up to 7.8% y/y from 7.5% while industrial activity rebounded to 5.8% y/y from 4.4% in August. Investment was perhaps the one area of disappointment, growth slowing to 5.4% y/y despite a further modest pick up on the State Owned side.
The final reading of US first quarter growth, at first glance, paints a positive picture. The quarterly pace of expansion came in at 3.1% ann. with y/y growth hitting 3.2%, the highest since Q1 2015. But the structure shows clear evidence of the cross currents at work with an upward revision to the inventories build and a relatively better gain from net exports offsetting a moderation of domestic consumption growth.
The improvement we saw in the headline activity numbers in March proved short lived with both industrial production and retail sales taking a renewed dive in April. Auto sector weakness was notably pronounced. Passenger car unit sales are down some 11% from the June 2018 peak, which is unprecedented in a developing economy with a reported growth rate as that of China.
Global activity is on the back foot. World trade has been weakening for months and the economic soft patch has turned into a more prolonged slowdown, certainly in Europe and Asia.