China January-February industrial output signals mild recovery

A worker cuts reinforcing bars in a steel factory in Ganyu county, Jiangsu province. — Reuters picA worker cuts reinforcing bars in a steel factory in Ganyu county, Jiangsu province. — Reuters picBEIJING, March 9 — China’s annual industrial output growth eased to 9.9 per cent in the first two months from a year ago, below market forecasts and adding to signs of uneven recovery in the world’s second biggest economy after its slowest year of growth since 1999. 

Economists polled by Reuters had forecast industrial production in January and February this year would grow 10.5 per cent from a year earlier. 

“This data shows that the economy is in the process of a mild recovery and that it is still fragile,” Xu Gao, chief macro-economic analyst at Everbright Securities in Beijing, told Reuters. 

Industrial output data today from the National Bureau of Statistics was published alongside retail sales numbers for January and February, which showed annual growth easing to 12.3 per cent, compared with a market consensus of 15.0 per cent. 

Fixed-asset investment - the main driving force of China’s recovery — exceeded expectations to rise 21.2 per cent in the first two months compared with the same period of a year earlier. 

The consensus forecast in the benchmark Reuters poll was for a 20.8 per cent rise. 

Property investment saw an annual increase of 22.8 per cent for January and February combined. 

China’s official statisticians publish combined numbers for January and February for the economy’s key activity indicators in an effort to smooth out the distortions caused by the timing of Lunar New Year holidays. 

The holidays fell in February this year and in January in 2012. 

Many businesses shut down for two weeks during the holiday period, causing a heavy seasonal skew in the numbers. 

Analysts consequently caution about reading too much into one month’s data at this time of year. Indicators elsewhere in China’s economy, however, seem to signal that an economic recovery, which began in the fourth quarter of 2012 after seven successive quarters of slowing growth, is maintaining modest momentum. 

Data earlier today showed consumer price inflation accelerated to a 10-month high in February. 

Producer prices at factory gates remained in deflation year-on-year, but rose 0.2 per cent month-on-month in a sign of increasing economic activity. 

Trade data yesterday, meanwhile, underlined the uneven path of the recovery, as exports soared past forecasts to jump by a fifth in February from a year ago, while imports were surprisingly weak, falling at the steepest pace in 13 months. 

That followed February surveys of factory activity, captured in twin purchasing managers’ index readings on March 1, which showed growth cooling to multi-month lows as domestic demand dipped and foreign order growth shrank from the previous month. — Reuters


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