China’s ‘data dump’ beats across the board

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Chinese industrial output, retail sales and fixed asset investment figures — known in markets as China’s “data dump” — have beaten across the board in August.

At face value, today’s numbers, along with those released in recent weeks, suggest that economic conditions improved noticeably last month.

In year-on-year terms industrial output grew by 6.3% according to China’s National Bureau of Statistics, above the 6% level seen in July and forecasts for an increase to 6.1%.

It marked the fastest increase in output since March, a period where authorities acted to bolster flagging economic growth by ramping up state-spending on infrastructure and housing development.

Retail sales also outperformed, expanding by 10.6% from a year earlier. Markets had been expecting growth of 10.3%, up from 10.2% reported previously.

It matched the growth pace recorded two months earlier, and was the fastest pace of growth since December 2015.

As seen in the chart below, the recent trend in retail sales and industrial output appears to be flat, rather than lower. This is in stark contrast to that seen before the start of last year.


Completing the trio of data beats, fixed asset investment rose by 8.1% between January to August compared to the same period a year earlier, unchanged from the level seen in July and forecasts for a deceleration to 8.0%.

Despite the beat, it continues to grow at the slowest level seen in 16 years, thanks in part to the high base effect established when authorities ramped up investment to counteract the effects of the global financial crisis in late 2008.

Not only that, the composition of growth continues to be driven by what many would deem to be the “old” Chinese economic model — state-backed infrastructure and property investment.

According to the NBS, private sector investment grew by just 2.1% over the same period, unchanged from the level seen in July. In comparison, state-backed investment grew by 21.4%.

Property investment grew by 5.4% between January to August compared to a year earlier, slightly higher than the 5.3% pace seen in the first seven months of the year.

In August alone, property investment rose 6.2% year-on-year, according to calculations from Reuters, substantially above the 1.4% increase seen in July.

While there are always questions raised over the validity of economic data released by the government, particularly when strong, the rebound in today’s numbers fits with that seen in recent data releases.

The official manufacturing PMI report — a measure on activity levels in the nation’s industrial sector from one month to the next — came in 50.4 in August, marking the fastest improvement in conditions since October 2014.

Trade data for August also impressed, particularly for imports which grew in year-on-year terms for the first time in 22 months, fitting with strengthening levels of demand along with higher commodity prices.

Though consumer price inflation eased over the same period, largely as a result of falling pork prices, producer prices logged their smallest year-on-year decline since April 2012.

Fitting with the trend seen in recent years, financial markets have barely stirred following the release of the data.

The Australian and New Zealand dollars — more sensitive than most to the performance of the Chinese economy — remain down for the session while Australia’s ASX 200 has actually trimmed its earlier session gains, currently trading up 0.31%.