Unofficial readings on China’s industrial activity released on Thursday add to a sense that the underlying economic vibrancy of the world’s second largest economy may have continued its ebbing trend into October.
This may surprise those who bought into the notion that industrial output rebounded strongly in September, rising to 8 per cent year on year, up from 6.9 per cent in August. In fact, though, that September “rebound” was largely the result of a big statistical base effect, according to China Confidential research.
Similarly, the announcement on Thursday of a pick up in HSBC/Markit’s manufacturing Purchasing Manager’s Index (PMI) to 50.4 in October so far – up from 50.2 in September – is misleading. In fact, readings on manufacturing output and new orders – the key measures of industrial vibrancy – revealed markedly weaker trends.
A brighter note to finish 2012 on, in Chinese economic data at least. Industrial profits are up – just – after recovering from a dip earlier in the year.
According to the National Bureau of Statistics, profits from enterprises above the threshold of $3m annual revenues were up 3 per cent in the first 11 months of 2012 from a year earlier, at a total of Rmb4.6tn. For the January-October period, profits had been up only 0.5 per cent.
Hardly a week goes by without a depressing bit of economic data from China. Monday’s version is industrial profits, which are down 5.4 per cent in July from 2011, according to national statistics.
Profits were Rmb366.8bn – the fourth straight month of decline. For January to July, the overall drop is 2.7 per cent year-on-year. The Shanghai Composite index closed on Monday at 2055.7, down 1.7 per cent – its lowest close since March 2009.