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China is looking at two days of crucial data releases that should give investors a better idea of the extent of the Chinese slowdown.Between August 9 – 10, China will be out with consumer price, producer price, industrial production, fixed asset investment (FAI), retail sales, trade balance, and import and export data.
Here’s what to expect from the first data dump out tonight:
Societe Generale’s Wei Yao
Consumer prices should decline again, easing to 1.7 per cent in July. Food prices have been increasing since early July.
“Although still far too early to call it a full-fledged rebound in broad inflationary pressures, the recent surge in global food prices, if it persists throughout the summer, will push CPI back above 3% yoy in Q4, setting a much higher hurdle for aggressive monetary easing.”
Bank of America’s Ting Lu
Consumer inflation is expected to fall to 1.7 per cent YoY in July. Food inflation should be down 0.3 per cent month-over-month (mum), while non-food inflation should be flat or slightly lower, since services prices should have held up despite a decline in raw material prices.
Producer prices are expected to decline 0.3 per cent month-over-month (mum), and 2.4 per cent year-over-year (YoY) in July as companies continue to de-stock in sectors where demand is lower than what they can supply.
Producer prices should fall to 2.6 per cent YoY in July and 0.6 per cent mum because of a slump in global commodity prices and fuel price cuts in May and June.
Chinese industrial production is expected to climb 9.7 per cent YoY in July and if the number were to match Yao’s forecast it would reiterate her call for a “slow bottoming” in the second half of the year.
Industrial production should be up 9.9 per cent but a significant jump might only surface in the coming months. This is because the impact of policy easing measures will only come through with a lag, and because of weather conditions since the first half of July was extremely hot, while ths second half saw rainstorms and floods.
Fixed Asset Investments (FAI)
Total FAI growth is expected rise to 23 per cent YoY and year-to-date (Ytd) FAI growth is expected to rise 20.9 per cent YoY. China’s recent railway investments are expected to be the biggest reasons for this growth. Property investment isn’t however expected to gather pace.
Year-to-date FAI should rise 20.4 per cent YoY, while FAI in the month of July should ease to 20.4 per cent YoY, from 21.2 per cent in June. Government measures to support the economy since early May have helped drive FAI.
Nominal retail sales are expected decline marginally to 13.5 per cent YoY in July, from 13.7 per cent in June.
Headline retail sales are expected to decline to 13.5 per cent year-over-year, while inflation adjusted retail sales are expected to stay flat at 12 per cent YoY.
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