Global economy accelerated in May but China slowed

Reports on the global economy last week were generally positive although China's economy appears to have slowed.

Surveys of purchasing managers around the world showed that the global economy accelerated in May. The JPMorgan global all-industry output index rose to 53.1 last month from 51.9 in November.

JPMorgan Global All-Industry Indices
	April	May
Output	51.9	53.1
New orders	51.6	52.9
Input prices	52.1	51.7
Employment	50.4	50.4

China's economy may have slowed in May though. The HSBC China composite output index fell to 50.9 in May, the lowest level since last October, from 51.1 in April.

Reports over the weekend also indicated that China's economy slowed in May.

Exports rose just 1.0 percent in May from a year earlier, the smallest increase since July last year, while imports fell 0.3 percent.

However, the deterioration in the trade data may have been exaggerated by a government crackdown on practices by firms that disguised financial inflows as exports.

Still, industrial production did slow to 9.2 percent year-on-year growth in May from 9.3 percent in April. Fixed asset investment grew 20.4 percent over the first five months of the year compared to the same period last year, down from 20.6 percent in the first four months.

More positively, year-on-year retail sales growth improved to 12.9 percent in May from 12.8 percent in April even as inflation slowed to 2.1 percent from 2.4 percent.

Meanwhile, credit growth in China cooled in May. New local-currency lending fell to 667.4 billion yuan in last month from 792.9 billion yuan in April. Aggregate financing in May fell to 1.19 trillion yuan from 1.75 trillion yuan in April.

M2 money supply rose 15.8 percent in May from a year earlier compared to a 16.1 percent increase in April.