HONG KONG (MarketWatch) — Chinese economic data released Wednesday showed consumer inflation moderated slightly in April, though remaining at elevated levels, while industrial output declined at a sharper-than-expected pace, amounting to a mixed picture and spurring concerns of a deepening slowdown.
China's consumer price index climbed 5.3% in April from a year earlier, while wholesale inflation climbed 6.8%. The results compared to analysts' expectations for rises of 5.2% for CPI and 7.3% for producer prices, according to a poll by Dow Jones Newswires.
The CPI reading also marked a modest drop after touching a 32-month high of 5.4% in March.
In other data released Wednesday, industrial output rose 13.4% year-on-year, compared to an expected 14.5% rise, and slowing from a 14.8% increase in March.
Analysts said the data pointed to heightened worries over the pace of economic activity in China, though the emerging picture was more for a moderation than a hard landing.
Slowdown
"Both the output and price data suggest that the Chinese economy is cooling off in April," Global Insight analysts said in a note on Wednesday, adding the factory activity was now suffering the sharpest pullback since the middle of last year.
Those concerns were also voiced by other analysts, with TD Securities saying China may be forced to raise interest rates further despite slower economic growth.
"Slowing activity that is not accompanied by easing inflation raises the prospect that Chinese monetary policy will continue to tighten," said TD Securities senior strategist Roland Randall in Singapore.
Officials could soon switch from worries over inflation back to concerns of stalling growth, a shift in focus that could be "gaining traction in policy-setting circles," Randall said.
Other data
Among other numbers released Wednesday, China's urban fixed-asset investment expanded 25.4% in the January-through-April period, outpacing expectations for a 24.9% rise.
On the credit front, Chinese banks issued 739.6 billion yuan ($113.9 billion) in new loans April, surpassing the 725 billion yuan pegged by analysts.
Broad money-supply growth, as measured by M2, expanded 15.3% for the month, short of the 16.5% expansion expected by economists.
Japan's massive earthquake and tsunami in March were cited as potential factors for the industrial deceleration by Bank of America Merrill Lynch.
Electrical-power shortages that forced Chinese factories to cut production were also a likely reason, Merrill said, adding they didn't see any game-changers in Wednesday's data.
"Our general view is that inflation is elevated, but the risk of being out of control is small, while the risk of a hard landing or big growth slowdown is quite low," said Merrill's Hong Kong-based analysts Ting Lu and T.J. Bond in a note.
However they acknowledged that their view of Chinese growth was at odds with the new perception taking hold in the market.
Hong Kong and Shanghai stock indexes, which sold off in the immediate aftermath of the data release, turned higher in early afternoon trade. The Hang Seng Index HK:HANGSENG -0.08% was up 0.3% after trading down 0.1%, while the Shanghai Composite CN:SHCOMP -0.25% edged up 0.1% after it also suffered a loss earlier.
No more whispers?
Wednesday's data also managed to retain a sense of surprise, after data leaks in March saw "whispered numbers" leaking the official figures well before the releases by the central bank and the statistics bureau.
"This time around, the most widely spread 'whispered numbers' proved to be just fake," said Merrill analysts.
The China Securities Journal said in a report that the April CPI would be above 5% without giving a precise range, though several reports cited whispered numbers in Chinese media of 5.1% and 5.2%.
Unlike last month's data which was widely reported days in advance, the April CPI figure was eventually leaked, but it only came out Tuesday night, according to Merrill Lynch analysts, who said they saw the number published on a microblog operated by a domestic mainland Chinese brokerage.
