China’s economy has continued to slow at the start of the fourth quarter of the year with October reporting sluggish figures for industrial production, retail sales and urban investment.
In fact China’s urban investment in October fell to levels of growth not seen since early 2001, a sure sign of the size of the slowdown in investment and economic activity in the country.
Retail sales rose at an annual rate of 11.5% in the month, down from 11.6% in September and have now slowed for five months in a row as the wider slowdown, especially in property, hits private consumption.
Industrial production was up an annual 7.7% in October from the same month in 2013, when it was up an annual 10.3%.
Last month’s figure, better than the 6.9% in August, but under the 8% reported for September.
Industrial production also increased 0.52% in October from September. In September, it climbed 0.91% from the preceding month.
And fixed-asset investment in urban areas rose 15.9% in the January-October period compared with the same period a year earlier, slower than the 16.1% increase recorded in the nine months from January to September.
That was the weakest pace since December 2001, dragged down by a slowdown in property investment amid a continuing decline in home sales.
But the weak property sector contained a glimmer of hope – year-on-year sales ‘only’ fell an annual 1.3% in October, much slower than the 10.3% annual slide in September as local governments in most major cities relaxed limits on mortgage lending to try and steady the falling sales.
The figures support the continuing weakness in producer price inflation (down now for 32 months in a row) and lack of any change in consumer price inflation in October which was steady on 1.6% (annual).
The slide in commodity prices is taking pressure off domestic consumers, but this is not translating into higher demand or better profit margins.
Analysts say the import data for October and the first 10 months of the year shows China is importing greater volumes of commodities such as oil copper and iron ore (not to mention soybeans as well), but the cost of those is lower than a year ago.
Among the production figures, the most import for Australia is crude steel output and that was down in Octover from a year earlier.
The country’s statistics bureau said October’s crude steel output fell 0.3% from a year earlier to 67.52 million tonnes, and down 0.03% from September. The October figure was the second lowest of the year so far, replacing September’s 67.54 million tonnnes.
Iron ore shipments fell 6.3% to 79.39 million tonnes in October. But they were still a very solid 16.7 million tonnes up on the 67.8 million tonnes imported in the same month of 2013.
Output in the first 10 months of the year rose 2.1% on year to 685.35 million tonnes. Iron ore imports were up 16.5% in the same period to a record 778.4 million tonnes. Exports of steel products were up 42% in the first 10 months of the year, answering the question of where the extra iron ore from countries such as Australia is being used.
Daily average production in October eased to 2.18 million tonnes, from 2.25 million tonnes in September.
The weak data helps explain the continuing measures from the government to boost exports (earlier in the year), property sales and imports.
Perhaps the most significant was the $US126 billion pumped into the country’s banks by the Chinese central bank in the past few months, has been the most important.
But yesterday also saw the first report from Beijing of rumours the government is talking about lowering the target growth rate to 7% in 2015 from 7.5% for this year.
