China's industrial production growth likely softened further from Q1 levels

The HSBC PMI indicates that production expanded at a slower pace m/m in April. The official manufacturing PMI production index increased 0.5ppt to 52.6, suggesting faster expansion m/m. The two PMIs diverged for the second month in a row, making it difficult to gauge the direction of industrial production (IP) growth. 

However, since the beginning of the year, the official PMI has been sanguine relative to actual IP growth and production growth in selected products, such as electricity, steel and cement. April IP growth may have improved over March (the lowest growth since the global financial crisis, partly due to the late Lunar New Year in 2015, which delayed the resumption of production). 

However, weak new orders (the HSBC flash PMI new order index fell further under 50) may have kept IP growth below the Q1 level of 6.4% y/y. Standard Chartered forecasts IP growth of 6.0% y/y in April.