Photo: Edwin Lee/Flickr
There’s going to be a lot of talk today about the Chinese economic data.Here’s a quick look at all the numbers, and how they stacked up against expectations:
- Real GDP: 9.1% vs. estimates of 9.3%. Previous was 9.5%.
- Industrial production: 14.2% vs. estimates of 14.1%, flat from the previous 14.2%.
- Retail sales: 17.7% vs. estimate of 170%. Previous was 17.0%.
Despite the headline “miss”, the consensus is that this was a fine report.
The September data show domestic demand was surprisingly strong, as both industrial production and retail sales growth rose (consensus expectations were a slight decline), while urban fixed-asset investment (FAI) dropped only marginally. Growth in industrial production unexpectedly rose to 13.8% y-o-y in September from 13.5% in August (Consensus 13.4%, Nomura 13.3%). On a seasonally adjusted month-on-month basis, industrial production grew by 1.2% in September. Nominal retail sales growth rose to 17.7% y-o-y from 17.0% in August (Consensus: 17.0%; Nomura: 16.9%). On a seasonally adjusted month-on-month basis, retail sales grew by 1.4% in September, outpacing the 1.3% gain in August.
And from SocGen:
Industrial production, fixed asset investments and retail sales all came in better than anticipated. Despite the softness in PMIs, IP growth accelerated in both year-over-year and month-over-month terms. All major categories seemed to be doing well. The average IP growth in Q3 was only 0.1ppt less than that in Q2. The lack of slowdown may be due to the fact that this series only covers large enterprises, which contributes to roughly 2/3 of total industrial production.
Overall, Chinese economic momentum seemed resilient through Q3, but this data is backward looking. Since liquidity problems have just started surfacing and the property sector has begun correcting, we expect more bumpiness ahead. Having said that, the central government is likely to pull out more policy easing from week to week. This slowdown will be less dramatic than that in 2008, and the easing is probably going to be gradual as well.