China Reports Mind-Boggling Plunge In Retail Sales, Industrial Output, Fixed Investment

Everyone knew it would be bad.

But I’m not sure anyone expected it to be as bad as it turned out to be.

China reported the industrial output/ fixed asset investment/ retail sales trio on Monday. Expectations were that the headline prints on the closely-watched activity data would show a simultaneous contraction for the first time in history.

Note that these figures are combined for January-February in order to smooth out seasonal effects around the Lunar New Year holiday. Obviously, this year’s numbers were seen taking a hit from the draconian measures adopted in China to contain the spread of the coronavirus.

Well, it’s bad, ladies and gentlemen. And by that, I mean that January-February retail sales in China posted a 20.5% drop, versus expectations of a 4% decline. Fixed asset investment plunged 24.5%, compared to the 2% contraction consensus expected.

Industrial output tumbled 13.5% against expectations for a 3% decline.

Looking at the range of estimates, it’s predictably wide. And yet, retail sales still missed even the most pessimistic guess from nearly two-dozen economists. The range was -14% to +7.9%.

On IP, the range was -13% to +4.5% and on FAI, it was -20% to +5.5%. So, these figures are worse than the most dour projections.

And, insult to injury, the end-February surveyed jobless rate jumped a full percentage point to 6.2% from 5.2%.

You should note that it is impossible to make heads or tails of this data. The entire Chinese economy was effectively shuttered for weeks upon weeks and then you have to throw in the holiday, which was extended.

Still, when taken in conjunction with the shocking drop in PMIs released late last month, and the sharp contraction in exports, this bodes poorly for China’s Q1 GDP numbers.

On the bright side, this argues for more fiscal stimulus from Beijing, so there’s always that perverse, silver lining.

If bad news is good news, horrible news is even better.

The PBoC injected $14.3 billion in liquidity via the one-year lending facility on Monday, but kept the rate unchanged. That, in turn, means the loan prime rate (the de facto benchmark) will likely remain unchanged later this month too, barring another MLF between now and the 20th.


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8 thoughts on “China Reports Mind-Boggling Plunge In Retail Sales, Industrial Output, Fixed Investment

  1. So when will China float? That should send the currency into the abyss. They might as well, given that any pretense China is a stable place for investment has now been shattered. Trump is likely incensed that China (directly or indirectly) shattered his precious stock market. and you can fully expect him to double down on tariffs or other punitive measures.

    And I don’t think Trump will have a problem winning against Biden, even if the economy is in a tailspin. My god, Biden’s ‘behavior’ shows he might be more dangerous than Trump! Even a sock puppet could beat Biden.

    1. Actually trump will have a problem. His cadre is a circus act. People want experience not clowns. They want a team of experts not family and sycophants. People will enjoy providing the country a woman vice if the pick is a worthy one. It is too easy to make the case that the trade war, isolationism, and inept response to the virus, all factored into the market crash. Did I mention the federal budget deficit balloon, and the federal debt sky rocket.

      1. “People want experience not clowns. ”

        Biden has nothing to offer. At least with Trump I could expect lower taxes. Bernies folks wont vote for Biden., so Trump wins by default.

  2. I have warned in January that China’s data for Q1 will be catastrophic.
    But China is no longer a sole problem. Let’s see what happens to the US data for Q2.

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