Solid economic figures for August from China, worrying signs of a weakening trend in already struggling Japan.
The Chinese economy showed no signs of slowing in August, if anything, it was a bit stronger.
Investment, industrial output and lending all grew last month, but exports were again weak.
All in all a good month, but not as good as some western media reports Friday would have us believe.
It should be remembered that August 2008 was the Olympics month and much of the industry around Beijing (for a 300 kilometre radius) was closed to lower pollution for the games.
That cut output, retail sales, investment and helped take the pressure off costs which were already starting to feel the impact of falling commodity prices.
The fall in exports should be seen as the major continuing concern as compared to the year before, the fall was sharper than expected.
But August’s exports were a bit better than July (up 3.4%); however imports showed widespread falls among commodities, but were still up 1% from July.
The annual rate of fall in exports increased to 23.4% in August compared to the same month last year, after dropping 23% in July.
Imports fell by 17% after declining 14.9% in July.
Crude-oil imports fell to 18.47 million tonnes in August, or about 4.37 million barrels a day.
China’s General Administration of Customs said that was down 5.9% from July’s record high of 4.64 million barrels a day.
Despite the drop, August’s imports were still the second highest on record.
Iron ore imports fell to 49.68 million tonnes, down 14% from July’s 58.08 million tonnes.
China’s imports of oil and iron ore had hit a record high in July, as the nation’s $586 billion stimulus plan continues to push up demand for commodities.
Copper imports fell to 325,000 tonnes, down from July’s 406,600 tonnes.
That was a fall of 20% and the second month in a row copper imports had fallen.
This helped produce a rise in the monthly trade surplus to $US15.7 billion from $US10.6 billion surplus in July.
The increases in output and investment were both ahead of forecasts and followed a series of figures in July which suggested the recovery might be weakening.
China’s output of electricity was 334.3 billion kW-hours in August, up 9.3% from a year earlier, according to the National Bureau of Statistics.
August 2008 saw lower electricity output because industry was on holidays around Beijing and in other regions.
New bank loans lending rose by Rmb410.4bn in August (US60.2 billion), after increasing by Rmb355.9bn the month before and by Rmb271.5bn in the same month last year.
Industrial output rose an annual 12.3% from August 2008, after a 10.8% increase in July.
Remember that August last year saw production cut by those Olympics-related factory closures.
Fixed-asset investment inched up to a rate of increase of 33% over August last year, after an annual 32.9% in July.
It’s been running around this level for much of the last five months.
Deflationary pressures eased with consumer price inflation falling 1.2%, better than the 1.8% fall in July.
That was due to a rise in food prices in August.
Producer prices shrank an annual 7.9% as lower commodity prices, like oil drove down costs.
Retail sales grew 15.4% from August 2008 as domestic demand remained solid.
For example, as we reported last week, car sales were strong, up 34.8% as a result of government subsidies and tax cuts in the huge stimulus package.
The Shanghai stockmarket rose 2.2% on Friday in the wake of the data release. That cut from the fall in August and early September to around 16%.
The market is still up 64% this year.
Investment in real-estate development grew 14.7% in the first eight months of this year after an 11.6% gain in the first seven months.
House prices in 70 cities rose 2% in August, the biggest rise in 11 months.
An update on Japan’s second quarter growth has chopped the first estimate from an annual 3.7% rate (or 0.9% month on month) to 2.3% (or around 0.60% month on month) .
The economy has seen growth: the first quarter saw a fall of 12.4% (annualised) or just over 3% quarter on quarter, but industrial production, inflation, retail sales, exports and several other leading indicators have been released since the end of June and suggest that this slowdown is continuing.
So noticeable is the slide that some Japanese economists are now warning of a double dip recession, with a slide into negative territory in the 4th quarter.
Business investment turned down in the June quarter by more than originally forecast (over 22%) and that’s a bad sign for future demand and this week figures showed a slump in machinery orders, another key indicator of future activity in Japan.
Wholesale price inflation continues to be sharply negative, down an annual 8.5% in August, which matches the size of the annual fall for July.
Seeing consumer price inflation fell 2.2% and core inflation was down 0.9%, a lot of pain is being inflicted on Japanese companies by the combination of falling import prices (iron ore, coal and oil) and the rising yen (which is imposing even greater price declines for both imports and exports).
The latest growth estimate from the Cabinet Office was sharply lower than the 3.7% annual forecast from the market.
