Chinese Avalanche Of Data Hits Markets Over The Weekend

Over the past weekend, an avalanche of economic data out of China was released and should affect markets Monday. Equities and commodities in particular should move on the news as markets digest the impact on global growth and demand from the data.

Mixed Trade Data

China first reported its trade balance for May which was wider than analyst forecasts. However, the balance was boosted by a drop in imports vs. an expected gain despite slower than anticipated export growth.

For the month of May, China's trade balance rose to $20.4 billion vs. a gain of $20.0 billion expected. The trade balance was wider than April's balance of $18.16 billion.

The trade balance was boosted by an unexpected drop in imports despite a slower than expected gain in exports. Exports grew 1.0 percent year-over-year vs. an expected gain of 7.4 percent. Exports had grown 14.7 percent in April.

Imports unexpectedly dropped 0.3 percent year-over-year vs. an expected gain of 6.6 percent. Imports had grown 16.8 percent in April.

Fake Shipment Crackdown

The government attributed the drop in export data to a newly launched crackdown on false reporting of export sales. The government noted that, in recent years, companies had been boosting figures artificially and has since began cracking down on these reports. They attribute the year-over-year comparable drop to these crackdowns.

The drop in imports, however, was not defended by the government. The drop in imports was a negative sign that the domestic consumption boom in China could be fading. The data is a perilous sign for the state of the global economy and for the near-term future for global growth.

Inflation

China also released inflation data over the weekend which missed economist forecasts. The Consumer Price Index rose 2.1 percent from a year ago in May, less than economist forecasts of 2.5 percent. Inflation slowed from April's 2.4 percent.

The Producer Price Index fell 2.9 percent in May as compared to an expected drop of 2.5 percent after declining 2.6 percent in April. Input prices have now fallen for 21 straight months as commodity price gains have stalled and food price inflation moderates.

Industrial Production

Another piece of key economic data to be released over the weekend was industrial production data, a key leading economic indicator correlated tightly to growth rates. Industrial production in China rose 9.2 percent from the same period a year ago vs. the expected gain of 9.4 percent. Industrial production had risen 9.3 percent in April.

The slower than expected annualized gain in industrial production was off-set by better year-to-date data. Industrial production through May in 2013 has now risen 9.4 percent vs. the first five months of last year, as expected and the same as April's figure.

Alongside industrial production, fixed asset investment, a figure that is largely described as a key metric of corporate investment and confidence in the economy, rose 20.4 percent in May from a year ago. Economists expected the rate of investment to gain 20.5 percent following April's 20.6 percent rise.

Retail, Vehicle Sales

The last two important pieces of data to be released this past weekend were retail sales data and vehicle sales, both pieces of data being used as key signs of consumer confidence and consumer spending in the Chinese economy. Retail sales gained 12.9 percent in May from the same period a year ago, in line with expectations. Retail sales rose faster than April's rate of 12.8 percent.

Lastly, vehicle sales gained 9.8 percent in May, slower than April's gain of 13.4 percent.

BY Matthew Kanterman