China Recovery Continues Apace As Industrial Output Accelerates

By Glenn Dyer | More Articles by Glenn Dyer

More evidence that China’s economy continues to improve as cases of COVID-19 remain low to non-existent.

Data yesterday from the National Bureau of Statistics confirmed that industrial output rose 5.6% in August from a year ago.

It was the fifth straight monthly improvement from the slump in March and April.

Analysts had forecast a 5.1% rise in industrial output from the 4.8% gain in July, but the reported outcome was much stronger.

Production grew for both manufacturing (6.1% vs 6%) and electricity (5.8% vs 1.7%), while mining output rebounded (1.6% vs -2.6%).

Among major industries, production rose for machinery (15.1% vs 15.6% in July), communication (8.7% vs 11.8%), general equipment (10.9% vs 9.6%), ferrous metals (9.2% vs 7.9%), chemicals (6.9% vs 4.7%), non-metal minerals (5% vs 3.1%), power equipment (5.9% vs 1.7%), and textiles (3.3% vs 0.7%).

Meantime, the output of transport equipment (cars) fell less (-0.3% vs -1.4%). For the first eight months of the year, output increased by 0.4%.

In further encouraging news, retail sales edged back into growth for the first time this year.

The NBS said retail sales rose 0.5% last month as household spending picks up following the relaxation of nationwide containment measures. The reading for August was much stronger than the 1.1% fall in July.

Fixed asset investment fell 0.3% in the first eight months of the year from the same period in 2019, compared with a forecast 0.4% fall and much better than the 1.6% decline in the seven months to July.

The NBS said that private investment fell 2.8% (vs a 5.7% fall in January-July) while public investment rose at a softer 3.2% rate (vs 3.8% in July).

After taking into account inflation real fixed asset investment rose by 9.4% year on year, up from 8.5% YoY previously.

The National Australia Bank said “This was the strongest increase since August 2016. Surprisingly there was a slowdown in investment by state-owned enterprises (which had driven growth in recent months), with a strong increase in private investment.”

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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