Industrial output in further slowdown

The growth of China’s industrial output, retail sales and fixed-asset investment slowed further in August under extreme weather conditions and deepening supply-side reforms, the National Bureau of Statistics said yesterday.

Value-added industrial output, an important contribution to GDP, grew 6 percent year on year last month, 0.4 percentage points slower than in July, official data showed.

That missed market expectations of 6.6 percent but was faster than the 5.3 percent increase in August last year.

Retail sales rose 10.1 percent, 0.3 percentage points slower than July and 0.4 percentage points slower than expected.

Fixed-asset investment rose 7.8 percent year on year in the first seven months of 2017, the slowest rise since 1999. The market had expected 8.2 percent.

Investment by the private sector, which accounted for more than 60 percent of total FAI, rose 6.4 percent year on year.

The national statistics bureau’s spokeswoman Liu Aihua attributed the slowdown in industrial output to bad weather over the past two months and the further elimination of high-consumption production capacity.

She said average temperatures in August were 0.6 degrees Celsius higher than average and rainfall was the third highest since 1961, resulting in reduced production.

Also, industrial output in high-consumption manufacturing sectors slowed to 2.9 percent as authorities stepped up efforts to build a greener and more innovative economy.

“Generally speaking, the pace of industrial upgrade is accelerating, which could power more stable and sustainable development in China’s economy,” Liu said.

She said China’s economy was still in good shape as major economic indicators remained flat from the first seven months and had improved significantly from last year.

More new jobs have been created, overall inflation is mild and economic structure is improving, Liu said.

Yesterday’s data showed that the Consumer Price Index, a main gauge of consumer inflation, rose to a 7-month high of 1.8 percent in August from July’s 1.4 percent.

The Producer Price Index, which measures factory-gate inflation, rose to 6.3 in August from 5.5 in the previous three months.

Liu attributed the increase to higher food prices. Inflationary pressure would not grow in the coming months, she said, due to sufficient supplies of food and a stable outlook for the price of services and industrial products.

The Australia and New Zealand Banking Group said a slight moderation in GDP growth is likely in second half. 

“While key economic indicators suggest a slowdown at the headline level, the details provide some bright spots,” the bank said. 

“The economy is still well-positioned to achieve above-target growth of 6.7 percent this year.”

The bank highlighted faster-than-average industrial output in manufacturing sectors, strong growth of online sales and more new projects as bright spots in the economy.

Earlier data revealed manufacturing activity growing faster than expected in August as the official Purchasing Managers’ Index, which measures vitality in the manufacturing sector, rebounded to 51.7 in August from July’s 51.4.

But the non-manufacturing PMI moderated to 53.4, the lowest since May last year, according to the statistics bureau.

Export growth also failed to meet expectations, slowing to 6.9 percent year-on-year in August, while imports rose 14.4 percent.