Chinese industrial output reassuring, inflationary pressures easing
Simon Ward
Post a Comment
The issue of whether China is heading for a “hard landing” is as important for global economic prospects as events in the Eurozone.
Market pessimism on China was boosted by weak headline PMI results for November. This weakness, however, may be attributable to seasonal factors: the official manufacturing PMI new orders index, seasonally adjusted within Datastream, was little changed between October and November – see last week's post.
The bear case seemingly received further support from news today that industrial output growth slowed from an annual 13.2% in October to a lower-than-expected 12.4% in November. An attempt to back out a seasonally-adjusted level index from the official data, however, suggests that the recent decline reflects base effects, i.e. large output increases a year ago dropping out of the annual comparison. The six-month rate of expansion, by contrast, firmed again in November, having bottomed in August. This pick-up follows an earlier revival in a leading indicator derived from OECD data – an update of this indicator will be available on Monday.
Inflation news today, meanwhile, was better than expected, with annual CPI inflation down to 4.2% and PPI inflation slumping to 2.7% – consistent with a recent sharp drop in the PMI input prices index discussed in the previous post.
View Printer Friendly Version
Email Article to Friend
Reader Comments