Industrial production slowed to 4.1% YoY in April, down from 5.7% in March. This also came in much lower than market expectations, registering a 33-month low.
The softness of industrial production was surprising, given the strong export data that we have been seeing in recent months. A look at the subcategories suggests that this export-driven momentum is still supporting the data, with auto (9.2%), rail, ships, and aeroplanes (8.2%), and computer, communication, and other electronic equipment manufacturing (15.6%) all well outperforming headline growth. Hi-tech manufacturing (12.8%) continues to fare well, with solid growth in both industrial (15.1%) and service robot (12.3%) production.
However, sluggish domestic activity is dragging many other categories. Real estate-related categories, such as cement (-10.8%), glass (-7.9%), and steel (-1.7%), were clear underperformers. We may also be seeing the impact of anti-involution policies, as solar cells declined -25.6% YoY in April amid a broader crackdown on overcapacity and excessive price competition.
The impact of the Iran War is also appearing in the data. Crude oil processing volume fell -5.8% YoY on the month. Electricity, heat, gas, and water production and supply bucked the broader trend, accelerating to 5.3% YoY in April.