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China May money / credit data: insufficient improvement

Posted on Wednesday, June 12, 2019 at 11:10AM by Registered CommenterSimon Ward | CommentsPost a Comment

Six-month growth rates of narrow money (true M1) and broad credit (total social financing) rose in May but remain weak by historical standards – a further pick-up is needed to warrant shifting to a more optimistic view of economic prospects.

The rise in nominal money / credit growth in May was offset by an increase in six-month CPI inflation, due to surging food prices – real rates of expansion were little changed.

Suggested implications:

1. Economic data will remain weak through Q3 and, probably, Q4.
2. Further policy easing is required and likely.
3. Prospects for early 2020 are improving.

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