China’s April data have been met with downbeat headlines. This is not surprising given that growth in almost all the key economic indicators slowed last month. But the comparison between April and March is misleading since the earlier timing of Chinese New Year this year relative to 2015 provided a boost to the March data. In order to iron out these seasonal distortions, we think it makes more sense to compare the April readings with Q1 as a whole. On this basis, the latest data look less worrying. While retail sales and investment growth slowed last month compared to Q1, the other key indicators actually improved in April. Looking forward, with the impact of earlier policy loosening still feeding through to the economy we continue to expect the data out of China to surprise to the upside in coming months.
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