Stronger foreign and domestic demand probably helped to stabilise China's economy in May, boosting growth in exports, factory production and retail sales, a Reuters poll showed.
However, a slight pick-up in parts of the world's second-biggest economy does not mean a solid, broader recovery is underway.
Investment -- an important driver of growth -- is forecast to slow further as China embraces sweeping financial reforms, and some market watchers believe a downturn in the housing sector may worsen in coming months.
Signs of only patchy improvement overall and a sharper deterioration in the property market would reinforce speculation that the government will loosen policy further to shore up the economy, following a series of modest measures in recent months.
"We think the government may have to relax property policies," said Wang Tao, an economist at UBS Bank in Hong Kong. "The ongoing property downturn is expected to create a bigger drag to the economy in the fourth quarter and in 2015."
Factory production is estimated to have risen 8.8 per cent in May from a year ago, the median forecast of 22 analysts showed, edging up from April's 8.7 per cent.
Retail sales likely rose 12.1 per cent up only a shade from April's 11.9 per cent.
Export growth, which whip saws from month to month but has steadily declined in the past four years, is expected to show the sharpest rebound by rising 6.6 percent in May, compared to April's scant 0.9 per cent rise.
Imports are seen expanding 6.1 per cent, up from April's 0.8 per cent gain.
A rebound in trade would affirm the buoyant results of two separate surveys of China's factory sectors in the past week. Both polls indicated that manufacturers had their best performance in four or five months in May as foreign and domestic demand rose.
No Turnaround Yet
Yet a stronger trade performance may be offset by persistent weakness in investment, which accounted for a hefty 54 per cent of China's annual economic growth last year.
Fixed asset investment is seen rising 17.1 per cent between January and May compared to the same period last year, down from a 17.3 per cent rise in the first four months of the year.
Mirroring the lethargy in capital spending, growth in credit and money supply is also believed to have flagged. The M2 money supply is seen up 13.1 per cent in May compared to a year ago, down a touch from April's 13.2 per cent rise.
The amount of new loans disbursed by banks is also estimated to have fallen to 750 billion yuan ($120 billion) last month, from April's 774 billion yuan.
In a sign of the times, producer prices are forecast to have dropped for the 27th consecutive in May by 1.5 per cent, though annual consumer inflation is seen quickening to 2.4 per cent, due partly to rising pork and egg prices.
"May is unlikely to be the month for a turnaround," economists at Daiwa Capital Markets said in a note.
"Moreover, the recent real estate market malaise makes us nervous about gross domestic product growth in 2014-15."
China's property market is grappling with a slowdown, hurt by less funding for developers and falling home sales following last year's upbeat performance.
Despite the moderation, Chinese home prices are still at record highs, but rising less quickly -- they rose 6.7 per cent in April on an annual basis, the weakest pace in 11 months.
Trade data will be released on June 8, inflation on June 10 and industrial output, retail sales and urban investment on June 13. New loan and money supply data will be issued June 10-15.($1 = 6.2541 yuan)
Copyright: Thomson Reuters 2014
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