China: Growth in industrial production picks up in August

In August, industrial production expanded 6.3% over the same month of last year, which exceeded the 6.0% rise observed in July. The print slightly overshot the 6.2% increase market analysts had expected and represented the fastest expansion since March. August’s reading reflected a much softer contraction in the mining sub-component. Conversely, growth in manufacturing production as well as in electricity, gas and water supply activities was slower in August than in the previous month.

On a monthly basis, industrial production expanded 0.53% in seasonally-adjusted terms in August, which was broadly in line with July’s 0.52% increase. The trend had followed an uninterrupted downward trajectory since late 2013, yet it now seems to be heading towards a mild improvement. Annual average growth in industrial production inched up from July’s 5.9% to 6.0%.

Although some factories shut down their production around Hangzhou in order to reduce air pollution ahead of the 4–5 September G20 meeting, industrial production benefited from two extra working days in August compared to last year as well as a recovery following July’s flood-related disruptions.

For 2016, FocusEconomics Consensus Forecast panelists expect industrial production to grow 5.9%, which is unchanged from last month’s projection. In 2017, the panel sees industrial production growth falling to 5.4%.