domingo, 15 de junio de 2014

domingo, junio 15, 2014

Heard on the Street

China Finds Softer Landing Pad

By Alex Frangos

June 13, 2014 6:48 a.m. ET


China's economy may be leveling out, but the ailing property market could still cause it to go off course.


Government figures indicate China's slowdown at the start of the year has at least stopped getting much worse. Industrial production grew 8.8% in May compared with a year earlier, slightly faster than April. Retail sales, an imperfect measure of consumer sentiment, rose faster than expected. As economist forecasts of second-quarter growth rate hover near the government's 7.5% full-year target, investors would be forgiven for putting hard-landing fears aside for now.

Other signs are somewhat reassuring. The labor market, which is difficult to gauge because of defects in official government measures, seems to be holding up, if not robust. A quarterly survey of over 4,000 employers by Manpower Group found the hiring outlook eroded slightly, but remains above six-month ago levels

Zhaopin.com, an online recruitment firm, said job listings in May grew 41% from a year earlier.

The leveling off is thanks to a series of government measures. A slight loosening of the lending taps saw credit growth, known as total social financing, rebound in May. There was also accelerated government spending, which grew 25% last month over last year's level, after rising just 10% through the first four months of the year. That fed into increased spending on infrastructure projects. A rebound in exports, supported by the yuan's weakness this year also might be at play.

The crucial property market continues to suffer, though slightly less than before. New-home sales declined 11% in May compared with a 15% decline in April. Property starts dropped 7.9%, less dire than April's 15% drop and March's 22% drop. That said, unsold inventory of apartments rose again last month, and is now a quarter higher than a year ago. Prices have only started to drop in many cities.

For now, a free fall into a serious economic slowdown seems to be on hold. But with the property market so uncertain, investors should be prepared for China's fortunes to change again soon.

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