The headlines said China’s economy slowed further in October with output, investment, and retail sales dipping (see separate story), but in the case of output, the week-long Golden Week and National day celebrations at the start of the month played a major role.
According to data from China’s National Bureau of Statistics (NBS), industrial output grew 4.7% in October compared to the same period a year earlier, down sharply from the 5.8% increase reported in September and below the 5.4% lift expected by economists.
But the impact of the week-long break on put can’t be overestimated, as well as production curbs to allow for clear skies during the break and further curbs in the month approaching the start of China’s winter heating season on November 15.
Those factors are not a total explanation – weak demand and profit margin pressures as well as growing producer price deflationary pressures (which add to the downward pressure on margins) also played a role.
China’s steel output was definitely hit by these factors last month, falling to a seven-month low.
China produced 81.52 million tonnes of crude steel in October, down from 82.77 million tonnes in September and 82.55 million tonnes in October 2018.
That marked the lowest level since March. Reuters calculated that average daily output of the industrial metal was 2.63 million tonnes, down from 2.76 million tonnes in September.
Production for the first 10 months of the year, China rose 7.4% to 829.22 million tonnes of steel.
China’s Iron and Steel Association forecast last month it expected the country’s crude steel output for 2019 to rise 7% from a year earlier to around 994 million tonnes.
On the level set in October of 81.52 million tonnes, crude steel output will top 990 million tonnes.
Other data showed falls in car production – down 2.1% year on year (with sales off 6%), cement making also down 2.1% (it was hit by the smog alerts and pollution curbs).
Oil production rose as did gas (ahead of the winter heating season) while electricity production jumped 4% and production of electronics goods was up a sharp 8%.