"Gloom" Returns To China’s Economy: Industrial Production, Retail Sales Miss Lowest Estimates
By Tyler Durden
After an unprecedented surge in Chinese attempts to stimulate the economy in late 2015, mostly on the fiscal side, coupled with recent monetary easing by the PBOC which cut the banks’ reserve ratio recently and unleashed a tsunami of new loan creation in January, many expected that this unprecedented credit impulse would translate into at least a modest rebound for the economy, prompting a stable pick up in spending for the economy which many are touting is now consumer-spending driven as opposed to export and production.
However, that did not happen: according to data released overnight by the National Bureau of Statistics, Chinese factories and retailers not only missed expectations, but slowed down materially from the December prints, as anemic demand and excess capacity continued to bear down on the world’s second-largest economy.
Specifically, Jan-Feb factory output grew just 5.4% in January and February from a year earlier, data released by the National Bureau of Statistics (NBS) showed, slowing from a 5.9% rise in December to the weakest since November 2008; the print matched the lowest Wall Street estimate.
Meanwhile, retail sales rose 10.2% over the two-month period from a year ago, below the lowest Wall Street estimate of 10.5%, and far below the December’s 11.1% increase, pushing the trend growth in this series to lows not seen since early 2015.
“Overall, the picture is still quite gloomy,” said Commerzbank AG economist Zhou Hao. “Normally, because of Chinese New Year, there’s a big drop and a big jump. This year there’s only a big drop.”
The retail data was particularly disappointing because as the WSJ writes “while industries have been battered by the economic slowdown, retail sales have been relatively buoyant, so the downtick surprised some economists, especially since it occurred around the Lunar New Year holiday when consumption is usually strong.”
And to think record, if fake, box office numbers were supposed to carry China’s economy in the aftermath of the absolutely disastrous trade data released earlier in the month.
To be sure, the commentary immediately explained that the weak data will mean even more stimulus, even though it was just last week when the Congress laid out all the measures that China will adopt to assure “GDP growth” of 6.5%-7.0%.
Here’s Reuters: “China’s activity data remained weak in the first two months of 2016, with factory output growth hitting the weakest since the global financial crisis, keeping pressure on policymakers to do more to avert a sharper showdown in the world’s second-largest economy.“
Unlike the recent collapse in Chinese exports and imports, the overnight data could not be “explained away” due to calendar effects as it combines the January and February timeframe: China’s government combines some economic data for January and February to minimize distortions tied to the Lunar New Year holiday, which falls during those two months. It was in early February this year.
It wasn’t all bad news: one area that did pick up was investment in factories, buildings and …read more
Source: "Gloom" Returns To China’s Economy: Industrial Production, Retail Sales Miss Lowest Estimates
