China’s July data dump is out and it’s an upside surprise. In year on year terms, industrial production showed a strong sight lift from June up 0.8% to 9.7%. Fixed asset investment was unchanged at 20.1%. Retail sales were up 0.1% to 12.8%. IP was strongly above consensus and retail sales slightly below.
These are better numbers than many, including me, were expecting in May, though one might expect the credit crunch to take some time to show up in growth.
When we throw in the PPI which is slowly making it’s way out of deflation it looks like China’s industrial economy looks to be strengthening.
Here are the internals courtesy of ANZ:
The bounce looks driven by steel in particular and heavy industry in general. No rebalancing here.
This ties in with recent commentary that we’ve seen about China seeing a new wave of real estate construction following last year’s and earlier this year’s surge in prices. Those prices havevery much begun to fall back now so how long it will last is a fair question. But now it looks like the Chinese economy is accelerating on its old drivers. It certainly helps explain the current strength in iron ore.
P.S. Apologies about my earlier post in which I was given some wrong data!
