China Inflation Data
• CPI (Fig 1.1) moderated to 6.2%, from 6.5% the previous month.
• PPI moderated to 7.3%, from 7.5% the previous month.
• Industrial production (Fig 1.2) year on year fell to 13.5%, from 14.0% the previous month.
• Retail sales (Fig 1.3) year on year fell to 17.0%, from 17.2% the previous month.
• Fixed asset investment (Fig 1.4) year on year fell to 25.0%, from 25.4% the previous month.
Over the weekend, the following figures will be released:
• Exports (Fig 1.5) – Year on year last month 20.4%; estimates for this month 22.0%.
• Imports (Fig 1.6) – Year on year last month 22.9%; estimates for this month 21.0%.
• Trade balance – Last month a surplus of $31.48 billion; estimates for this month $24.60 billion.
COMMENTARY: A year-long effort to tightening monetary conditions in China and slow inflation is obviously working. Last night’s report provides the best evidence yet that a “soft landing” has been navigated by the People’s Bank of China.
In the coming months, I expect further evidence of both a slowdown in growth and moderating inflation. Keep in mind, growth figures such as exports, imports, retail sales, and fixed asset investment are up against some strong fall of 2010 numbers.
The bottom line: I expect the Chinese tightening cycle is over – a favorable condition for global growth.
Fig 1.1 China CPI, 10/31/10-8/31/11
Fig 1.2 China Industrial Production, 9/30/10-8/31/11
Fig 1.3 China Retail Sales, 9/30/10-8/31/11
Fig 1.4 China Fixed Asset Investment, 9/30/10-8/31/11
Fig 1.5 China Exports, 9/30/10-7/31/11
Fig 1.6 China Imports, 9/30/10-7/31/11