Anyone hoping for a clear guide as to the health of the Chinese economy from yesterday’s key data drop for January and February would have found just more confusion.
Last weekend we found that the Lunar New Year disrupted a good look at the trade data for both months – but it was clear exports and imports were weaker than they were for much of 2018. Inflation remains benign, especially for manufacturers, with disinflation noticeable.
Industrial output rose 5.3% in the January to February period from a year earlier, slowing from a 5.7% year-over-year increase in December, the National Bureau of Statistics reported.
That’s the slowest growth rate since the GFC and 2002.
The agency releases combined business activity data for the first two months to smooth out distortions on account of the Lunar New Year.
Production was mixed – Crude steel output grew strongly – up by 9.2% year on year (YoY) with fewer winter capacity closures.
Total steel output for the two months jumped 9.2% to 149.58 million tonnes, from the first two months of 2018.
Cement, another construction related material, rose by just half a percent.
But motor vehicle production fell by 15.1% year on year, continuing the weakening trend from mid-year in 2018.
Electricity output also rose modestly – up by 2.9% YoY – while production of consumer electronics rose 6.0% YoY, less than half 2018’s growth of 13.1%.
Investment growth seems to have steadied. Fixed-asset investment in China’s outside rural households rose 6.1% over the two-month period from a year ago. Retail sales climbed 8.2% in the first two months from a year earlier, holding steady from December’s on-year growth, as economists had expected.
The National Australia Bank said in a commentary yesterday afternoon:
“It is difficult to get a clear signal around China’s economic conditions in the early months of each year – as changes to the timing of the Chinese new year holiday period have a major impact on the data.
“That said, surveys suggest that manufacturing conditions remain weak – on both domestic and export demand – consistent with our view that Chinese economic growth will continue to ease this year.”