China Data Misses Forecasts
China’s economy ticked over in October (a bit like Australia’s as shown in yesterday’s NAB survey for last month) but there are suggests a slowing could be ahead as urban investment hit a new 18-year low.
Real estate investment also cooled for another month in China in October as the slide in sales steepened, hinting that the property sector continues to lose momentum amid a government crackdown on riskier lending.
The country’s economic activity eased a touch as factory output, investment and retail sales all lost ground.
Industrial output rose 6.2% from a year earlier in October, down from September’s 6.6%. Retail sales rose expanded 10% from a year earlier, down from 10.3% in September, while fixed-asset urban investment was up 7.3% in the January - October period.
That was down on the 7.5% rate in the 9 months to September which was the lowest reading since 1999. Now the October figure is the new low.
And while crude steel output rose strongly last month to 74.7 million tonnes, up from 71.8 million tonnes in September and well ahead of the 68.5 million tonnes for October, 2016.
But analysts caution that the increase last month may reflect production being brought forward ahead of capacity closures between November and March.
Planned capacity closures across 26 northern Chinese cities between November and March start this week, while unused capacity covering more than 25 million tonnes has been shut elsewhere, as well as in the north.
In contrast, cement production – closely tied to the construction sector – fell by 3.1% year on year (yoy), automotive production rose by just 0.6% yoy (compared with 3.1% in September) and electricity output increased by 2.5% (down from 5.3% previously).
Property investment grew 5.6% in October from a year earlier, from 9.2% in September, according to Reuters' calculations based on data from the National Bureau of Statistics.
Reuters said this was the slowest since July.
Investment in the first 10 months of the year rose 7.8% from a year earlier, compared with 8.1% in the first three quarters of the year.
(The figure mainly focuses on residential real estate but also includes commercial and office space). The National Australia Bank said in a commentary that "Given the upturn in producer prices in recent months, real investment has been negative recently – down by around 0.9% in October (broadly similar to September). The softer trend for nominal investment has largely come from private sector firms, and
"China’s trade surplus widened considerably in October, at US$38.2 billion, as imports slowed significantly. Iron ore imports totalled 79.5 million tonnes in October (compared with 102.8 million tonnes previously), the lowest level since February 2016.
"This likely reflects destocking ahead of the shutdown of steel production capacity between November and March,” The NAB said.
Imports of oil, coal and copper all fell, but not shipments of LNG which is being bought to assure gas supplies for the northern winter as coal-fired power stations are shut down to cut pollution.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.