China's Industrial Production Slows in October

Lester Mason
November 14, 2017

Industrial output rose 6.2% in October from a year earlier, missing analysts' estimates of a 6.3% gain and down from a 6.6% increase in September.

Industrial production grew 6.2% year-on-year in October, compared to a 6.6% increase in September, according to China's National Bureau of Statistics. This has been the slowest paced that the retail sales experienced since the start of the year.

Fixed asset investment also cooled with the year-to-date rate of growth slipping from 7.5% in September to 7.3% in October (consensus: 7.3%). According to a researcher at Bank of China Ltd.'s Institute of International Finance in Beijing, Gao Yuwei, "Today's data look a little slower because we had better readings in September, but it doesn't indicate the economy's going down", and "China will end the year with a good performance". China's economy has surprised financial markets with robust growth of almost 6.9 percent in the first nine months of this year, underpinned by a recovery in its manufacturing and industrial sectors thanks to a government-led infrastructure spending spree, a resilient property market and unexpected strength in exports.

Output over the first 10 months of 2017 reached 2.85 billion tonnes, up 4.8 percent from the same period a year ago.

"We must be aware that China is at a pivotal stage for transforming its growth model", NBS spokeswoman Liu Aihua said in a statement.

Retail sales data also underwhelmed, with the rate of growth printing at 10% on the year after increasing by 10.3% in the month before.

The economy was resilient in the first half partly due to a government-led infrastructure spending spree. Most China observers say Beijing would not risk a sharp slowdown in growth through its debt and pollution clampdown given a major focus on creating jobs.

To take note of, Julian Evans-Pritchard at Capital Economics called attention to how FAI in fact accelerated by a tenth of a percentage point to 5.8% in year-on-year terms, as an "up-tick" in infrastructure spending and factory investment offset slower capital outlays on property.

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