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November, 2017 1:09 PM



Chinese data disappoints

Chinese data disappoints

Chinese retail sales rose at a 10.0 per cent annual rate in year to October ? the slowest growth in eight months.

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14.11.2017 04:14 PM

Solid Chinese growth
Chinese economic data

Chinese retail sales rose at a 10.0 per cent annual rate in year to October – the slowest growth in eight months. The result was below the 10.4 per cent forecast and below the 10.3 per cent growth in the year to September. Real retail spending was up 8.6 per cent over the year.

Chinese production: Industrial production rose at a 6.2 per cent annual rate in October, below the forecast average (6.3 per cent) and below the 6.6 per cent growth in the year to September

What does it all mean?

In September, Chinese economic data surprised on the upside. In October the data surprised on the downside. Overall, the Chinese economy is growing at a solid, but certainly not spectacular, annual pace. The focus is on consumer spending and infrastructure to drive economic growth.

What do the figures show?

Chinese retail sales rose at a 10.0 per cent annual rate in year to October – the slowest growth in eight months. The result was below the 10.4 per cent forecast and below the 10.3 per cent growth in the year to September.

In real terms, spending was up 8.6 per cent on a year ago (up 9.3 per cent in September).

Annual growth rates were: garments (up 8.0 per cent); building materials (up 6.1 per cent); furniture (up 10.0 per cent); personal care (up 7.8 per cent); home appliances (up 5.4 per cent); jewellery (up 2.5 per cent); cars (up 6.9 per cent); cosmetics (up 16.1 per cent); communication equipment (up 2.1 per cent); oil (up 8.2 per cent); office supplies (up 4.4 per cent); tobacco & alcohol (up 9.0 per cent); Cereal, food (up 10.1 per cent); and beverages (up 7.2 per cent).

Online retail sales in the 10 months to October were up 34 per cent over the year.

Industrial production rose at a 6.2 per cent annual rate in October, below the forecast average (6.3 per cent) and below the 6.6 per cent growth in the year to September.

Crude steel production rose by 6.1 per cent in October compared with a year ago. Other changes included: motor vehicles (up 5.3 per cent); Computer, communications and other electronic equipment manufacturing (up 13.8 per cent); crude oil (down 4.1 per cent); coal (up 4.8 per cent); special equipment manufacturing (up 12.1 per cent); nuclear power generation (up 18.4 per cent); and natural gas (up 9.7 per cent).

Urban investment rose by 7.3 per cent in the 10 months to October on a year ago (forecast 7.4 per cent) and below the 7.5 per cent growth in the first nine months of 2017. Private fixed asset investment rose by 5.8 per cent in the 10 months to October on a year ago. Oil & gas exploration was up by 14.7 per cent while primary industry investment was up 13.1 per cent and road transport was up 24.7 per cent.

Fixed asset investment was strongest in Health & social work (up 28.1 per cent); Computer, communications and other electronic equipment manufacturing (up 28.9 per cent); Water Conservancy, Environment and Public
Facilities Management (up 24.5 per cent); and Public facilities management industry (up 25.9 per cent).

Why is the data important?

China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economy have major implications for the Aussie economy.

What are the implications?

The Chinese economy continues to mature, and as a result growth rates continue to slow. But solid growth continues. Notably real retail spending in the second largest economy on the planet is expanding at around an 8.5 per cent annual pace. Online spending continues to soar.

Originally published by Craig James, Chief Economist, CommSec
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