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Saturday, September 12, 2009

Chinese Industrial Output Grows, Prices Decline Moderately

China’s economy was firmly on the recovery track, a slew of economic data released by the National Bureau of Statistics Friday showed. The economic indicators showed an improvement in August, with industrial production, retail sales and urban investment in fixed assets all improving, while consumer and producer prices declined at a slower annual rate.

Consumer prices were down 1.2% on year in August compared to the 1.8% contraction in July, representing a slower rate of decline than the 1.3% drop expected by economists. Month-on-month, consumer prices were up 0.5% in August.

In terms of commodities, housing prices recorded the biggest annual fall, down 5.4% in August. Transportation & communication prices decreased 2.9%, and clothing prices dropped 2.2%. The fall was partly offset by food prices, which increased 0.5%, while prices for tobacco, liquor & articles were up 1.3%. Healthcare & personal articles prices rose 0.9% in August.

Producer prices slid 7.9% year-on-year in August compared to the 8.2% decline in the previous month. The drop was roughly in line with economists’ expectations for a 7.8% annual contraction.
On a monthly basis, producer prices climbed 0.8% in August, marking the fifth consecutive month of growth.

Producer prices for means of production decreased 9.7% on year in August. Of this, prices in the mining & quarrying industry were down 25.9%, and the raw materials industry dropped 11.5%. Prices in the processing industry slipped 6.9% in August. Prices for means of livelihood were down 1.9% on year, with food prices and durable consumer goods prices falling 2.3% each. Also, purchaser’s prices for raw materials, fuel & power contracted 11.4% year-on-year. Of this, prices for non-ferrous metals, fuel & power, ferrous metals, and raw chemical materials & wire decreased 20.9%, 17%, 19.2% and 11.3%, respectively.

Retail sales were also roughly in line with expectations, gaining 15.4% on year in August compared to forecasts for a 15.3% rise, and were worth a total of 1.01 trillion yuan. Retail sales had risen 15.2% in July.

Analyzing by commodities, sales of grain & oil went up 12.7% year-on-year in August. Clothing sales increased 23.3%, and sales of articles for daily use was up 15.6%. Sales of motor vehicles and building & decoration materials rose 34.8% and 36.6%, respectively.

Industrial production was up 12.3% on year, topping forecasts for a 11.9% annual increase after the 10.8% gain in the previous month. August was the fourth consecutive month which witnessed an acceleration of annual growth.

All 39 industrial sectors showed year-on-year growth in August. Significant increases were reported in the textile industry, which grew 9.8%, and the raw chemical materials & chemical products industry, up 18.2%. The manufacture of non-metallic mineral products and the manufacture of general machinery was up 17.3% and 12%, respectively.

In terms of products, the output of coal climbed 14.6% over the previous year in August. The output of crude oil was up 1.6%, and electricity output rose 9.3%. The production of motor vehicles soared 90% in August.

The Bureau also announced that the urban fixed asset investment for the period of January to August, increased 33% year-on-year and amounted to 11.3 trillion yuan. Economists were looking for 32.7% growth.

From January to August, Investment in coal mining & washing was up 36% compared to the corresponding period of the previous year. Investment in production & supply of electric power & heat power increased 23.5%, while investment in railway transport soared 103.5%.

The Chinese yuan rose against the dollar following the release of August data.

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