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China's economic recovery gathered momentum in October, a slew of economic data released by the National Bureau of Statistics showed on Wednesday. Industrial production and retail sales continued to surge ahead in October, while consumer and producer prices declined at a slower yearly rate.
Industrial production increased 16.1% year-on-year in October, faster than the 13.9% rise in the previous month. Economists had expected output to rise 15.5%. This was the sixth straight month in which industrial output has accelerated on a yearly basis. Industrial output was up 0.8% on a monthly basis.
All 39 industrial sectors posted year-on-year growth in October. Significant increases were reported in the manufacture of transport equipment, which grew 28.9%, and the manufacture of raw chemical materials & chemical products, up 25.4%. Output in the ferrous metal smelting & pressing industry and the non-metallic mineral products industry climbed 25.1% and 18.4%, respectively.
In terms of products, production of coal increased 21.1% over the previous year in October. Electricity output was up 17.1%, while output of crude oil decreased 1.8%. Production of pig iron soared 42.4%.
Retail sales came in above expectations, rising 16.2% annually in October compared to forecasts for a 15.7% rise, and totaled CNY 1.17 trillion. Retail sales had risen 15.5% in September.
Analyzing by commodities, sales of grain & oil went up 20.7% in October. Sales of motor vehicles surged 43.6%, while sales of meat, poultry & eggs increased 9.2%. Sales of clothing, articles for daily use, and household appliances, music & video equipment grew 22.7%, 23.5% and 35.4%, respectively.
Meanwhile, consumer prices in China declined 0.5% year-on-year in October, slower than the 0.8% fall in the previous month. Economists had expected prices to fall 0.4%. On a month-over-month basis, consumer prices were down 0.1%.
Five of the eight commodity groups posted annual declines in prices in October. Housing prices recorded the largest decline, falling 3.8% in October, followed by transportation & communication costs, down 2.7%. Prices of clothing, and household facilities, articles & maintenance services decreased 1.6% and 1.2%, respectively. On the other hand, food prices grew 1.6%, and prices of tobacco, liquor & articles were up 1.3%.
The statistical bureau also announced that the producer price index decreased 5.8% annually in October, slower than the 7% fall in the preceding month. Economists were looking for a 5.2% drop in prices. On a monthly basis, producer prices increased 0.1%.
Producer prices for means of production dropped 7.2% compared to the previous year. Of this, producer prices in the mining & quarrying industry went down 16.3%, prices in the raw materials industry declined 8.3% and that in the processing industry slid 5.6%.
Further, producer prices for means of livelihood decreased 1.4% on year. Food prices were down 1.2%, while prices of clothing, and durable consumer goods declined 0.8% and 2.1%, respectively.
It was also reported that urban investments in fixed assets in the period of January to October increased 33.1% compared to the corresponding period of the previous year, coming in below expectations for 33.5% growth.
The strong showing of the latest economic data should add credence to the view that a monetary tightening cycle is imminent, irrespective of the dovish tone adopted of the People's Bank of China. PBoC Vice Governor Ma Delun reportedly commented on Tuesday that the central bank did not have a timeline for ending its loose monetary policy and stressed that the current policy stance will be maintained for the time being. But with the Chinese economy recovering at a faster-than-expected rate, the central bank's resolve is likely to be tested.
The Chinese yuan, which rose to a three-week high against the U.S. dollar early on Wednesday morning, did not show any major reaction against the dollar amid the report.
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