NEW home sales in China rose by a slower pace in the first five months of this year, the National Bureau of Statistics said in a statement yesterday.

New homes worth 3.18 trillion yuan (US$483 billion), excluding government-subsidized affordable housing, were sold between January and May, a year-on-year jump of 53.4 percent. However, that was slower than the 61.4 percent annual surge in the first four months.

A total of 428.7 million square meters were sold in the five-month period, up 34.2 percent from the same period a year earlier, according to the bureau. But the figure also decelerated from a 38.8 percent year-on-year rise in the January-April period.

“The property market began to regain some rationality in May though the growth rate in general still remained high,” said Lu Wenxi, a senior manager of research at Shanghai Centaline Property Consultants Co. “The rather insignificant fall in the sales growth in the first five months reflected a cooling in first-tier cities like Shanghai and Shenzhen where strict tightening measures have been implemented as well as continuing robust buying sentiment in most second-tier cities.”

Meanwhile, investment in all types of property climbed 7 percent in the first five months, a dip from the 7.2 percent annual rise in the first four months, according to the bureau.

 DEFLATIONARY pressures in China eased further in May, relieving some pressure on cash-strapped companies, but consumer inflation was cooler than expected, suggesting the central bank will keep policy supportive in coming months but be in no hurry to cut interest rates further.

Consumer inflation rose less than forecast as pressure from high food prices eased, while producer prices recovered more than forecast, the National Bureau of Statistics said yesterday.

The consumer price index rose 2 percent year-on-year in May, compared to April’s 2.3 percent increase. Food prices were up 5.9 percent year on year in May after rising 7.4 percent in April. Pork prices rose 33.6 percent last month and hit record levels last week.

Non-food prices rose 1.1 percent, flat from April and continuing to show a lack of price pressures that would indicate activity in the broader economy was gaining steam.

Analysts polled by Reuters had expected consumer inflation to come in at 2.3 percent, the same pace as in each of the previous three months.

“On a month-on-month basis, China’s CPI has been dropping for three consecutive months, clearly pointing to an easing bias in monetary policy for the time being,” said Zhou Hao, senior Asia emerging market economist at Commerzbank.

Improvements in producer prices will not change China’s overall soft inflation outlook, Hao added.

In a sign that strains on Chinese companies are easing, producer prices fell at their slowest rate since November 2014, supported by a government investment spree and higher commodity prices.

The producer price index fell 2.8 percent in May, up from April’s 3.4 percent drop. On a monthly basis, producer prices rose 0.5 percent, the third increase in a row.

Analysts had expected the PPI to fall 3.3 percent, extending a decline for more than four years which has eroded profit margins.

China’s consumer inflation rate remains well below the official 3 percent target, and despite strengthening producer prices, analysts do not see inflation at these levels impacting policy decisions.

“At these levels, inflation dynamics are not an important factor in this year’s monetary policy decisions,” said Zhu Haibin, chief China economist at JPMorgan.

Zhu said May and June figures will continue to show a recovery, but expected growth to slow again in the second half. “We still see one interest rate cut this year. It’s a close call, but we see that it is still likely to happen. We moved the timing to the fourth quarter when we see the growth dynamics slowing down.”

Many economists have scaled back expectations of further cuts in interest rates and bank reserve ratios this year as the central bank has shown a preference for more targeted cash injections to help badly stressed sectors such as farming and small companies.

Data released on Wednesday showed China’s exports in May weakened, but imports were stronger than expected.

 EXPORT growth continued to slow in May while imports rose for the first time in 19 months, pointing to a pick-up in domestic demand but a not-yet-firm overall recovery.

Exports in yuan-denominated terms rose 1.2 percent year on year to 1.17 trillion yuan (US$181 billion), slower than April’s 4.1 percent rise, according to figures released by the General Administration of Customs.

Imports surprised the market by growing 5.1 percent year on year to 847.1 billion yuan, reversing April’s 5.7 percent decline and ending an 18-month losing streak. That led to a 7.7 percent narrowing of the trade surplus to 324.8 billion yuan.

“May’s exports indicate that global demand remains lackluster while import data suggests domestic demand has improved,” Australia & New Zealand Banking Group said. “We need to wait for a firmer recovery in the US and Europe so that China’s export growth can sustain positive growth. For imports, we do not expect a strong rebound in the near term as domestic demand will likely edge down on a tighter credit environment.”

The bank said faster depreciation of the yuan in May nudged headline growth rates in yuan terms compared with those in dollar terms, and it did not expect China’s monetary authorities to guide the yuan significantly lower to boost the economy.

“The government does not favor competitive devaluation,” it said, “but rather wants to boost China’s competitiveness through innovation and technological upgrades.”

Li Jing, an HSBC economist, said May’s figures pointed to some signs of stabilization, but recovery was not yet on a firm footing. “The detailed breakdown suggests that demand for major commodities improved substantially in volume terms, likely the result of accelerating infrastructure investment. However, the external demand outlook continues to pose key downside risks to growth.”

Exports to the European Union, China’s largest trading partner, rose 2 percent year on year in the first five months, while exports to the US and the Association for Southeast Asian Nations, the second and third-largest, shed 5.2 percent and 1.6 percent respectively, official figures showed.

The latest data echoed earlier indicators revealing uncertainties in economic outlook.

The official purchasing managers’ index, which reflects conditions in largely state-owned manufacturers, ended at 50.1 in May, while the Caixin China PMI, slanted toward private and export-oriented companies, dipped to 49.2 from 49.4 in April.

The People’s Bank of China yesterday cut its annual forecast for exports from a 4.1 percent increase to a 1 percent decline for 2016 while maintaining its GDP growth forecast at 6.8 percent.

 THE yuan edged up against a basket of currencies in May despite hopes for a stronger US dollar, according to an index released by financial services provider China Foreign Exchange Trade System.

The yuan exchange rate composite index, which measures the yuan’s strength relative to a basket of 13 currencies including the US dollar, euro and yen, stood at 97.15 at the end of May.

That marked a gain from 97.12 a month earlier, CFETS said in an article published on its website yesterday.

The article attributed the appreciation to the yuan’s strengthening relative to other emerging market currencies.

Though the yuan weakened 1.5 percent against the dollar due to anticipation over an interest rate hike in the US, other emerging market currencies saw even sharper depreciation against the dollar, weakening by over 2 percent.

Despite a weaker yuan against the dollar in May, the market remained calm and stable, the article said.