This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world, and straight ahead on the program. A big week coming for US retailers. I'm Tom Busby in New York.
I'm Stephen Carolyn London, where a major business conference could see tough questions asked of the Bank of England, governor, the government and the man who wants to be the UK's next Prime Minister.
I'm Brian Curtis in Hong Kong. The Chinese economic data have been all over the map. Are we recovering there or falling back?
I'm Kaylee Lyons in Washington, where we have not one but two bank failure hearings on death in the Senate.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg Eleve Them free own New York, bloombergon ninety nine to one, Washington, d C Bloomberg one oh six one, Boston, Bloomberg nine sixty, San Francisco, DAB Digital Radio London, Sirius XM one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg Business App.
Well, Good day to you. I'm Tom Bus. We begin today's program with the state of the US retail industry, with earnings this week from some of the sector's biggest names. Two thirds of the economy is consumer spending, and a big chunk of that is spent at retailers. But because of stubbornly high inflation, consumers are now paying the highest prices ever, as retailers pass along higher costs, also borrowing costs,
including credit card rates the highest in sixteen years. And joining us now for how that is affecting those chains. Bloomberg retail reporter Brendan Case. Brendan, thank you so much for being.
Here, Thanks for having me all right now, before.
We look ahead at what you expect to see from those individual retailers, let's talk about the industry as a whole, its challenges, as well as what's going pretty well. You know, retail sales. They fell for a second month in a row in March. Is that an indication that those high prices and higher interest rates have really slowed spending.
Yes, it is, and that's pretty much in line with what the big retailers have been expecting. Both Target and Walmart issued profit forecasts and their outlooks for comparable sales this year back in February, and both companies came in pretty well below wall streets expectations for a lot of
those key metrics. And if you look at what they're expecting in terms of comparable sales and in terms of revenue, what you're seeing is a pretty muted outlook with you know, consumer spending at least as they see it, poised to sort of have trouble keeping up with inflation, and so in real terms kind of looking for flat to maybe even slightly down, and so you know, both companies are kind of setting expectations in a pretty cautious way for this year, and I do think that that reflects some
weakness and consumer spending.
And speaking of which a parrel sales, they fell for the first couple of weeks of April versus March five point seven percent versus six point nine percent as easter warmer weather early in the month, just not enough to boost people into the malls and into stores. Transactions down more than five percent average amount slipped. This is all five served point of sales data. But not looking good, is it?
Yeah, that's exactly right. And this gets us into one of the big stories from last year that is certainly going to carry over to this year. And obviously, looking at apparel sales, you know, across the board, we're going to see varying results from the apparel specialists, depending on
each particular company. But if you look at the big mass market retailers like Walmart and Target, last year, apparel was a real source spot in terms of the goods that they couldn't move and they had to discount pretty heavily. And if you just sort of take a step back, what happened last year is that both of those companies and many others misjudged a shift in demand pretty dramatically, and the shift was away from perchase of discretionary goods,
including apparel, but also electronics, patio furniture, kitchen appliances. People started spending a lot less on that than before, and they started spending more on groceries, which partly reflected price increases.
They were forced to spend more on the essentials, and it also partly reflected greater spending on services with restaurants and travel kind of coming back as the pandemic was abating, and so looking at apparel, that is going to be another area this year where probably a lot of consumers are going to say, you know, maybe I can wait another few months before buying that pair of genes or
buying that blouse. Apparel is going to be a weak spot, and probably so will electronics and all those other kind of home goods that people spent so heavily on in the early stages of the pandemic and now they either don't need those goods as much or they're kind of willing to wait a while before before buying them.
All right, well, Brenda, let's talk about some of the individual companies that are reporting this week to kick things off in the sector. And up on Tuesday is Dow Component Home Depot. Now spring the busiest season of the year for the chain, are we expecting to hear that people are still spending on those home improvement projects, upgrading their lawns, doing the driveway? I mean, are we looking good at Home Depot?
You know, it's going to be a really interesting test. There were some indications in the last report that home improvement spending was showing some weakness, and so the first thing we're going to be looking for is any evidence that that trend is continuing or worsening. Now, sales themselves have actually done okay thanks to higher prices, but the unit sales have been down, and so in other words, people are buying fewer things, but they're paying more for them.
And then one of the big questions to watch with with Home Depot, especially in terms of the commentary of the executives, is kind of what they're seeing in the US housing market and how that's filtering through to their results. Traditionally, their sales, at least in the eyes of many analysts, have been tied to US home sales, which have been very choppy but you know, clearly showing some signs of weakness.
At the same time, the company has been at pains to emphasize recently that it's home prices that can justify a lot of spending in terms of like do it yourself home improvement projects, and so what they say about that, what the latest trends are they're seeing in terms of their drivers of sales, especially related to the housing market. That'll be a big watch item for Wall Street and for the rest of.
US Wednesday is target among I think among the most nimble of retailers, and what are we expecting there, and particularly I know, the emphasis on groceries. They've moved things around in the store near you know, to really put an emphasis on that part of their business.
Yeah, very much so. And what they're trying to do there is to tap into the increased spending on just the basic goods, kind of put those, put those very much front of mind for consumers, and harvest as much of that spending on the basics as they can. You know, for Target, they get about twenty percent of their sales
from food and beverage. If you define grocery a little more, a little more broadly to include you know, non consumable items that were you know, constantly buying paper products, you know, cleaning supplies. You get to a higher percentage of their sales, but it's still well below fifty percent, and so they're trying to reposition themselves to serve that demand and to sort of adjust to the fact that a lot of their signature goods or sort of their signature strength over
the years has been in the more discretionary items. You know, they've got the reputation for the you know, the cheap chic kind of positioning in the market. They get a lot of people into the stores looking at clothes, looking at you know, bedlinens, you name it. That's where there was a lot of weakness in sales last year, and probably that weakness will continue, especially in the earlier part of this year. It gets a little cloudier as we get into the second half of the year. We'll just
have to see. But Target will certainly be wanting to emphasize it's food and beverage and grocery sales, but it'll be a big question mark what their discretionary goods sales look like. And you know, last time we heard from them in February, the CFO just came right out and said that the biggest question mark for them is just the path of the US consumer.
And we could say the same thing about the biggie Walmart earnings out on Thursday. Is it going to be the same as Target?
You think?
And then you get the big one, and I think the dynamics there are a little different. Look at the last two really three quarters for Walmart, they're comparable sales. They've just been hitting the cover off the ball, and a big part of the demand they've been getting has been coming from wealthier consumers, people with household incomes of
more than one hundred thousand dollars. And what you're seeing there is you're seeing Walmart's strength in grocery, which accounts for you know, fifty five percent of their total sales. You're seeing their lower income customers, middle income customers, you know, spending more on those goods simply because they have to prices rising, and then you're seeing some of the higher income households switching over to Walmart in search of bargains,
search of lower prices. Despite that strength the last few quarters, Walmart came out with a pretty sober outlook for sales
and co perable sales this year. There was some debate among analysts about, you know, are they really that worried about consumer spending after so much strength recently, you know, or could it be more a case where they just wanted to sort of err on the side of caution if you ask, If you ask the company, they kind of echo what Target said about uncertainty, And you know, they've they've said that it's really hard to predict right now and they want to be realistic with their assumptions.
But what we're going to see next week will be a big update on that, and we'll also see whether their first quarter results are more in line with the strengths they've had the last few quarters, or if there's a noticeable shift and you know, you see a lot of a lot more weakness creeping in.
Oh boy, a lot to look forward to. Brendan, thank you so much. That's Bloomberg Retail reporter Brendan Case. And coming up on Bloomberg day Break weekend, big annual gatherings of movers and shakers on the UK political and economic scenes. I'm Tom and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. And up later in our program hearings on what went
wrong at US regional banks. But first, in the UK, political and business leaders will be gathering for the annual conference of the British Chambers of Commerce. They'll include the Governor of the Bank of England and the man who could be the next Prime Minister for more. Lets head to London and bring in Bloomberg Daybreak Europe banker Stephen Carroll.
Tom. This event is happening at a time when the UK economy is facing all kinds of challenges. Inflation is still in double digits, growth as flatlined, and the possibility of a recession remains close. All the more reason that businesses will want to hear from the likes of Andrew Bailey from the Bank of England and the Opposition leader cair Starmer as well to discuss what we should expect from the British Chambers of Commerce event. Is our UK
correspondent Lizzyburden, who'll be covering it for Bloomberg TV and Radio. Lizzie, this is an organization that represents tens of thousands of firms in Britain, all sorts of sizes. Set the scene for us about what the big issues are that they'll want to be discussing at this event.
Well, Stephen, the consensus among business leaders that I speak to is that the one thing Liz trust got right is that the UK needs better growth. So part of that does come down to plugging the holes in the labor market. Of course, in the latest budget, the Chancellor announced the childcare reforms the pension reforms, both to try
to entice people back into the labor market. The question is are they enough to reduce the tightness in the labor market and that to have an impact on inflation, which of course we know is still in double digits here in the UK. They may also businesses want the Chancellor to loosen immigration rules more.
Of course, it's a.
Toxic issue post Brexit, and at the CBI annual conference in the autumn last year, the Opposition leader Kir Starmer actually was talking tougher on immigration, so it'll be interesting to see see how the two parties frame that one.
Now.
The other question is how to make the UK more investible. Of course recently we've heard the Financial Conduct Authority looking at changing listing requirements for the UK. Really the question is how do you help businesses grow and then keep them here once they've reached a certain size, because it's been a real blow for the government to lose arm CRH and Flutter all to other bosses.
You mentioned the CBI conference as also this question of the sort of beauty pageant that politicians have at events like this, where they want to show up and be popular and liked. And because we are in a very long countdown to a general election in the UK, that's a really important pitch for Keir Starmer, the Opposition leader, because he really wants to be able to confirm his pitch as being, you know, Labor being a party that's going to be a pro business.
Yeah.
We don't have a date for the next election at the moment, we're expecting it to be at the latest autumn twenty twenty four. Businesses want are specifics. They want things that are temporary to be made permanent so that they can make that investment. In particular, they want to know what's coming in terms of tax cuts. That's going to be a key battleground in the run up to the next election. Can the government afford to cut taxes?
Where is it going to make tax cuts? Labor really needs to present itself, as you say, as the party of businesses. I do think as well that it's significant that Labor is sending its leader, Kir Starmer. The government so far we know, is only sending a Treasury minister. So in terms of signaling how important business is, it looks like Kiir Starmer's taking it a bit more seriously.
Yeah.
Interesting. Now industrial policy is something on the minds at least some of the businesses at this conference. On Bloomberg Radio, we've been discussing this with Ben Fletcher from make UK, which represents manufacturers here speaking to Caroline Hepger on Bloomberg Radio, and they're called for an independent inquiry into the British government's industrial policy.
The things I think.
That is really important is that we look around the world and see which countries do it better than us.
And I think if you look at Germany, if you look at France, you've got a very very long term sustained plan.
If you look at America, you look at a number of places in the Far East, they've all got really clear plans and they've all got a real investment in skills and a focus on what this is going to achieve over the next ten years.
And if you compare that to where we are now.
Jeremy Hunt made some really positive steps forward in the budget last autumn, some clearly defined areas that he wants to invest in, but we really need to scale up from that and we need a huge amount more flesh on the bone in terms of detail.
What of the Labor Party, I mean, we have an election general election looming that not that long away, and that the polling is very positive for the Labor Party if they were to get in. Do you think this is something that would appeal to them.
We certainly hope that both parties look at it seriously and take it seriously.
To directly address your question, you know, we've had some positive signs coming up. The Sounac government and Hunt's budget set out that ambition, and we strongly welcome that. The opposition party's labor in particular has said that an industrial strategy is critical and they would want to.
Produce one and deliver one in government.
What we're trying to do, I think, is to be a bit of a catalyst for all of that thinking.
It's really critical that we get this right.
We've learned some lessons from COVID I think about the impact if we don't have a lot.
Of domestic capability.
We're seeing the focus on net zero, We're seeing the focus on industrial growth in our big competitors, and at the moment our plan isn't fully functional, isn't fully worked, and isn't fully resourced. So what we see is a receptive audience on both sides of the house. What really we want to do is to put a turbo charger underneath that thinking and get people to realize that this isn't something you can just talk about you really have to do.
So.
That was Ben Fletcher from Make UK speaking to Caroline Hepger on Bloomberg Radio. The labor market, Lizzie's also going to be in front in the coming days, we're going to get an update on wages and unemployment for the UK. What should we be watching out for.
Tightness in the labor market has been driving up inflation, so that's why these numbers are so crucial for the Treasury as well as the Bank of England. In the last data it was tighter than expected. People were still demanding wage rises to try to keep up with inflation, but then inflation has been swallowing up wage rises in
real terms. This data is for March and April. I would really keep an eye on the employment rate, the unemployment rate, I should say, wage growth, and the number of days that have been lost to strike action, because we know that in the latest GDP data, which of course you said, growth had flatlined. One of the big
reasons was because strikes were weighing on services output. And finally, looking at economic inactivity because as I say, we've got this huge these holes in the labor market that need to be plugged.
Yeah, the tightness in the labor market is helping those who are changing jobs in England, though they're securing pay rises of varient ten percent, according to data from the recruitment company Read analyzed by Bloomberg. Here's Read's CEO James Reid speaking to us on Bloomberg Radio.
A lot of employers are struggling to find the people they need and so they're paying a premium. They're paying a premium to attract new applicants, so the wages have
been going up. I suppose what's interesting about this data is it's a much more forensic analysis that we've done with Bloomberg than we've ever done before, over five years worth of pay data, and it's showing some very interesting variations and it does raise some interesting questions, doesn't it about the future of the labor market and what the Bank of England might do, et cetera. So I think this data is fascinating and I would urge people to have a look at it.
That was James Reid, the CEO of the recruitment company Read on Bloomberg Radio. Lizzie. Another question that I wanted to circle back to in relation to the British Chambers of Commerce conference is this idea of who represents business in the UK when they're speaking to politicians. The biggest business lobby group in this country, the Confederation of British Industry, has paused operations because of allegations of sexual misconduct and
harassment among staff. The CBI is effectively in limbo. Who is the government and other politicians speaking to when they want to speak to business.
Well, I actually interviewed one of his Treasury ministers, the City Minister, Andrew Griffith, and I asked him this very question and he said that the Treasury is always talking to business. There's a plethora of lobby groups out there for that community. You've got the British Chambers of Commerce, who's hosting this conference. There's also the Federation of Small Business,
the FSB, and the Institute of Directors the IOD. So all of them are trying to fill this void that's been left by the CBI when the government has said that it's so problematic that I think the Chancellor himself said there's no point engaging with the CBI when their own members have deserted them in droves.
Okay, something to watch out for as we look ahead to the events of the coming week. Thank you to Bloomberg's UK correspondent Lizzie Burden. I'm Stephen Kroen in London. You can catch us every weekday morning here for Bloomberg Daybreak Europe, beginning at six am in London on one am on Wall Streets. Tom.
Thank you, Stephen, and coming up on Bloomberg day Break weekend, some big hearings on what went wrong with US regional banks. I'm Tom Busby and this is.
Bloomberg broadcasting live from the Bloomberg it aactive brokers studio in New York. Bloomberg elemon three oh to Washington d C, Bloomberg ninety nine one to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixteen to the country, Sirius XM Channel one nineteen to London DAB Digital radio, and around the globe the Bloomberg Business app in Bloomberg Radio dot Com. This is Bloomberg Daybreak Weekend.
I'm Tom Busby in New York with your global look ahead at the top stories for investors in the coming week. The regional bank turmoil still haunting us as we move into the new trading week, and for more, let's add to our Bloomberg ninety nine to one newsroom in Washington and Bloomberg Sound On co host Kaylee lines, Kaylee.
That's right, Tom. It's still not fully clear if regional banks are completely out of the woods yet, after a series of failures this year. It of course began in March. Silvergate had to wind down, Then Silicon Valley Bank and Signature Bank collapsed and were put into receivership by the FDIC, and then First Republic followed earlier this month, and here in Washington, they're still trying to pick apart exactly what happened and what should be done so it doesn't happen again.
This coming week, we have two big hearings before the Senate Banking Committee. The first is Tuesday, where Committee Chairman Senator Shared Brown is about to get this wish which he shared with me back in March, to come true.
We could move more quickly if the bank CEOs got out of their ivory towers and actually came and talked to us.
That's right. On Tuesday, more than two months after the failures of their respective banks, for executives from SVB and
Signature will testify before the committee. Then on Thursday, it will be the bank regulators in the hot seat, with FED Vice Chriff Supervision Michael Barr and fdi C Chair Marity Grenberg set to testify once again, along with several other witnesses from regulatory bodies, and in an interview with Bloomberg this past week, the CEO of JP Morgan Jamie Diamond had this message for them, we.
Need to finish the bank crisis. We've had uncertain policy on mergers as first Arizon deal. I think we have to assume they'll be a little bit more so, you know, whatever the FDIC, the OCC, the Fellow Reserve or whatever they need to do to make it better, they should do be thoughtful, be very forward looking. You'll not be surprised constantly because some of these things have been known about for quite a while.
So will we get progress toward making it better? What answers from regulators, congressional leaders, former bank executives are we likely to get this coming week? Joining us now hopefully to help answer those questions? Or Zacho And he's a congressional reporter for Bloomberg Government as well as Ben bay And, who heads up Bloomberg's financial regulation coverage here in Washington, Zach Ben, thank you both so very much for joining us.
And Zach, I'd like to start with you first. On the first hearing on Tuesday, we've got Greg Becker, the former Silicon Valley Bank CEO, Scott Shay, the former chair and co founder of Signature Bank, and Eric Howe, the former president of Signature Bank. Are these three essentially just going to get scolded and reprimanded by senators for several hours or does the committee actually just want to glean some new information from this hearing or ultimately just get some clips for campaign ads.
Probably a little bit of both. You know, these executives don't really have a lot of friends left in Washington, so and this is really the first time that they're going to be able to talk directly to these lawmakers, at least in a public setting. Previous hearings have all been with these regulators, like you mentioned with Michael Barr and Marty Grunberg, and so this will be the first time where lawmakers will be able to say, we've brought
these executives in. These are the questions we have, These are the scoldings that we want to give to them, and then to move on and say, what did happen, what could have been done to prevent these failures, and what could be done to prevent further failures of these midsize banks. And so I expect you'll see a little bit of politics, a little bit of more substantive probing, depending on who on the panel is at the microphone.
There's always politics act. But I do wonder if this might actually be really bipartisan. Are we likely to see a difference in tone between the Democratic and Republican members of the committee or are they mostly in line on this specific issue when it comes to bank executives.
I think everybody that we've talked to and that they've said, you know, Chairman Sharon Brown, ranking Member Tim Scott, the top Republican have all said that the bank executives are at least partially to blame for these bank failures. And so, yeah, we do expect a bipartisan thrashing to a certain extent of these executives who are going to come in and try to defend what happened at these banks and the lead up to their failure.
So it sounds like there's definitely going to be some fireworks on Tuesday, and Ben I wonder if there's also going to be some fireworks on Thursday when the regulators are the ones that are in the hot seat there, of course, Marty Grunberg, the FDIC, the FEDS, Michael Barr. They have already been before the committee on the issue bank failures. So what's going to be different this time around? What are we likely to hear that we haven't heard already?
Well, I think we're you know, fast forward a couple of weeks from the last time they appeared, and the situation still hasn't been fully resolved, and we're going to hear from former Silicon Valley Bank and former Signature Bank CEOs and those banks have failed. But in the meanwhile, there's still several you know, mid sized regional banks that the market seems quite concerned about, and you know, there still is this angst out there about potentially other shoes
to drop. So I think there's gonna be a lot of questioning about whether bigger fixes need to happen policy wise. Now, the fti C has come out with a recommendation a thought of, you know, kind of what they'd like to do in terms of the Deposit Insurance Fund, which was certainly in the spotlight because that was used to make really everyone whole who was who had money in those two failed banks. But they need Congress to step in.
So it's kind of this, you know, interesting moment where the regulators saying, Hey, we actually need Congress to do something and write a new law here to be able to to kind of come in the way that we might want to. And you have a situation in Congress where we're really not much is passing in terms of legislation, legislation at all in this area or any other.
Yeah, the pace of the congressional response clearly has been quite slow, at least in comparison to the speed with which the crisis has moved. But these regulators been do have a certain degree of discretion here in terms of what they would like to do with their existing authority. Right, how quickly could we see them actually tighten things on their own, I mean there's.
Certainly things they can do. I mean they can you know, these banks that failed and other banks are highly regulated entities, so you know, they're constantly going back and forth with their regulators over and getting various levels of scrutiny depending
on which business activity we're talking about. So there are there are certainly things that regulators can do to dial up that scrutiny, and there were you know, a hole shown in terms of what was actually being looked at in you know, there's regulars, there's regulators on a regular basis, they can they can on their own go ahead and make those tweaks, but for the big kind of holistic changes that they might want, you know, they're going to
probably need lawmakers to do something that all said. The Federal Reserve has been doing a review of a lot of you know, kind of oversight of banks and some of the rules, and that's happened. That's in the backdrop that was that was occurring before you know, this crisis, and I'm certain, I'm certain that what has transpired over the past two months are certainly can inform you know,
whatever new rule proposals they come out with. So there are things regulators can do, but you know, ultimately, like many things, you know in Washington, it's Congress kind of needs to step in to do the big, big things.
Zach, Will Congress do the big things? Do you think is there actual momentum toward that, because as I said, I mean, these banks failed two months ago, and we're still holding hearings that are kind of backwards.
Looking, right, And I think part of that might be maybe a lack of urgency. As you've heard from from Yellen and Diamond. I think there's some confidence that maybe the crisis is abating or at least, you know, not quite finished, but at least you know, this isn't a two thousand and eight really fast paced crisis, so to speak. You know, other than these you know, these small regional banks, and so there's a couple of things that they probably
won't do. The twenty eighteen rollback of Dodd frank On, you know, that lowered the liquidity requirements for some of these mid sized banks. That's not going anywhere. There's really no interest in the Republican controlled House or among Senate Republicans to work with Democrats and something like that. There's by parties an interest in things like clawing back pay to some of these executives, maybe to recoup costs, or maybe increasing the cap on uninsured, increasing the cap on
insured deposits. And so maybe we see something along those lines. But I think lawmaker's role here is not so much in legislating, but in pressuring regulators to enact the kind of more strict requirements that they've been looking for in the kind of oversight that maybe was missing during these failures.
Yeah, and of course we're talking here about the failures we have seen. But Ben, I feel like there is, and you were alluding to this earlier, still some fear in the market that there could be more failures to come. Are we likely to see more banks collapse before anyone can get around to making real changes?
Well, I don't.
I don't think, you know, we quite know the answer to that. I mean, there are it's been it's been you know, kind of days of while trading some of the Some some days, you know, these these shares are getting getting pounded down, you know, in the double digits. Other days that you know they'll kind of come roaring back. It does seem like there is in some instances, a disconnect between, you know, what the market is doing and what maybe the bank is saying about its business.
Ben Bain, regulatory team leader for Bloomberg News and Zach co And a congressional reporter for Bloomberg Government, Thank you both so much. Really looking forward to the coverage of both of these hearings next week and we'll send it back to you.
Thank you, Kaylee.
Kaylee Lines reporting from our Bloomberg ninety nine one newsroom in Washington, and you can hear Kaylee and co host Joe Matthew on sound on weekdays one to three pm right here on Bloomberg Radio. Coming up here on Bloomberg day Break weekend, looking ahead to some key Chinese economic data coming our way. I'm Tom Busby, and this is Bloomberg. This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the coming week.
I'm Tom Busby in New York. China's economy bouncing back now that COVID measures have eased, But just how big of a bounce? For more, Let's go to Hong Kong and Bloomberg Daybreak Asia host Brian Curtis and his colleague Doug Krisner.
Tom, It's a simple question, is the Chinese economy sputtering or recovering? But the answer may be much more complicated. We'll get a slew of data in the coming week that will no doubt shed some light on the issue.
Now, in the past week, we had some shocking data for the month of April. Producer prices fell further into deflation. Consumer prices at the same time barely positive, and imports plummeted.
That might change with the retail sales and industrial production in the coming week. There are significant cross currents in the economy and to try to sort through them, we asked James Meger, Bloomberg Economics editor for Greater China and Mongolia, to join us. So, James, thank you. We understand that the base effect from last year is distorting the picture. In the case of exports, for instance, it made the data perhaps look better than they what the reality is. However,
in the case of imports, it's actually worse. I mean, if imports were worse this year, down seven point nine percent from last year when we were in lockdown, well that tells you they were pretty bad.
I mean, obviously the base effects from last year in April of last year, Shanhaio, as you said, was in lockdown, your lockdowns across the country, and so that's seriously going to undercut the amount of that time. It's going to make a lot of the numbers look better. So, as you said, exports were a lot better than expected, we expect retail sales to jump by like twenty percent or something in this April. But I know if you try and remove those from what we're looking at, the economy
does seem to be really struggling at this time. Obviously, imports are very weak. Commodity and that's not just a commodity price thing. You know, the use of coal in the economy is falling. Deal companies are cutting prices because of weak demand for steel. We saw the excavated companies that sell you know, excavators for construction sales are down forty forty one percent in April for them. If you're looking across the whole economy, the industrial sector seems to
be very weak. Exports don't seem to be particularly strong. Construction isn't really rebounding. Even though the housing sector seems to be stabilizing, You're not seeing a rebound in construction. You're not seeing a rebound in new home sales. So on all these critical sectors, the Chinese economy looks very weak at this time.
In the coming months, we're hearing that China is expected to roll out some policies to address this growth issue away from applying direct fiscal stimulus. When you think about things like protecting supply chains or boosting the birth rate. Is there something more the government can be doing away from applying more money.
So there's been a there's a real effort right now to attract more foreign investment into the economy. You know, you just have officials from across China, like cities, provinces, even the central governments, spreading out countries in Asia and more more widely to the Middle East for example, to try and get foreign investment to return to China. And there was a real slump in foreign investment during the pandemic, especially last year, and the aim is for this money
to help drive growth this year. You know, the question is whether that's going to happen or night. And so far there hasn't been any sign of like a really bullish return of foreign investors to the Chinese economy. That's whether that's in greenfield investment in sort of new factories and new production here, or whether that's in portfolio flows and people buying into the stock in the bond market.
There hasn't been the sort of an inflow of money that would help boost the economy, and so the government's really left with things like fiscal spending. You know, if export demand is weak. If foreign investment is not coming in, all you really have is there the domestic leavers for driving growth, whether that's more subsidies for the electric vehicle market, or whether it's you know, things like more subsidies for people to encourage them to have more children.
James, thanks for helping out and helping us understand what's going on in China's economy as we look ahead to the retail sales and industrial production data in the coming week. James Mager, who is a Bloomberg Economics editor for Greater China and Mongolia.
James, thank you. I'm Brian Curtis, along with Doug Krisner. You can catch us every weekday here for Bloomberg Daybreak Asia, beginning at six am in Hong Kong and six pm on Wall Street. Tom.
Thank you, Brian and Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at five am Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Tom Buzzby. Stay with us. Top stories and global business headlines are coming up right now.