Here's What To Expect From This Weekend's Massive Chinese Data Dump

China drums

Photo: AP Images

Beijing is clearly worried about the slowdown in the Chinese economy.It launched its first round of easing in the May-July period with interest rate cuts. Now China has announced an infrastructure stimulus that is being viewed as the second round of easing.

But August’s data releases aren’t expected to signal a recovery. Here’s what analysts expect:

September 9

Inflation

Societe Generale’s Wei Yao
Consumer price inflation is expected to rise to 2.1 per cent year-over-year (YoY) in August, from 1.8 per cent in July. CPI is expected to be driven mostly by food inflation, but inflation is also expected to be impacted by rising rents.

Producer prices however are expected to diverge, and PPI is expected to fall further to -3.5 per cent YoY in August, compared with -2.9 per cent in July. A decline in PPI “would be another indication of China’s massive excess capacity that will take years to be eliminated”. We’ve previously explained how the divergence in consumer and producer prices have made the job of the Chinese central bank a lot harder.

Bank of America’s Ting Lu
Consumer prices are expected to rise to 2.0 per cent YoY in August pushed by food inflation. Data from the ministry of commerce shows that wholesale average vegetable and egg prices in the first three weeks of August were up 12.3 per cent month-over-month (mum) and 2.1 per cent mum respectively.

Producer prices are expected to decrease to -3.3 per cent YoY and 0.3 per cent mum. Rising commodity prices won’t pass through to PPI for a few months. This decline is likely led by a drop in the prices of steel and coal.

Bloomberg consensus
Consumer prices are expected to climb 2 per cent YoY and producer prices are expected to come in at -3.2 per cent YoY.

Industrial Production

Wei Yao
Heavy Chinese industries continue to suffer from excess capacity – when production in certain industries is lower than optimal levels and reflects a lack of demand – and are expected to have performed poorly. And manufacturing has declined for two straight months. Given this, industrial production is expected to gain 9 per cent YoY in August, lower than 9.2 per cent the previous month.

Ting Lu
Industrial production is expected to ease to 9 per cent YoY.

Bloomberg consensus
Industrial production is expected to rise 9 per cent YoY, and year-to-date (Ytd) industrial production is expected to rise 10.2 per cent YoY.

Fixed Asset Investment (FAI)

Wei Yao
Fixed asset investment is expected to have climbed to 23 per cent YoY in August, form 20.4 per cent in July. Year-to-date (Ytd) FAI is expected to rise to 20.6 per cent YoY. FAI is expected to gain from government revisions to the 2012 budget for railyway FAI.

Ting Lu
Ytd FAI is expected to slow to 20.3 per cent YoY in August in part because of falling producer prices. FAI for the month of August is expected to decline to 19.8 per cent YoY. The government’s infrastructure projects should however help sustain FAI growth in coming months.

Bloomberg consensus
Ytd fixed asset investment excluding rural is expected to rise 20.4 per cent YoY.

Retail Sales

Wei Yao
Retail sales are expected to ease to 13 per cent YoY in August. “Besides weak external demand, the lagged impact of low property transactions earlier in the year likely continued to drag on domestic consumer demand.” Sales of household products and automobiles, and home decorations are also expected to be impacted.

Ting Lu
In nominal terms, retail sales are expected to decline to 13 per cent YoY in August. In inflation-adjusted terms retail sales could fall even further to 12.0 per cent, from 12.2 per cent in August.

Bloomberg consensus
Retail sales are expected to rise 13.2 per cent YoY in August.

September 10

Trade Data

Wei Yao
The export order sub-index of the PMI report has been below the contractionary level of 50 and the value of orders at the 2012 Canton Fair shrank 2.3 per cent YoY adding to signs of a slump in exports. Exports are expected to grow 1.5 per cent YoY in August because of Europe’s ongoing debt crisis and “new signs of slowing demand in emerging markets”

Imports meanwhile are expected to grow 2 per cent YoY, compared with 4.7 per cent in July. And the trade balance is expected to contract to $17.2 billion.

Ting Lu
Exports are expected to grow 3 per cent YoY. Signs of this weakness are evident in the export sub-index of the PMI reports. Imports are expected to slow to 5.0 per cent YoY, and the trade balance is expected to narrow to $15.3 billion.

For the second half of the year export and import growth are expected to slow to 3.2 per cent and 6.3 per cent respectively.

Bloomberg consensus
August exports are expected to rise 2.9 per cent YoY. Imports are expected to be up 3.5 per cent YoY, and the trade balance is expected to narrow to $19.5 billion.

Don’t Miss: China’s Economy Faces 9 Major Challenges >

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