China Industry October 2019

China

China: Industrial production moderates sharply in October

November 14, 2019

Industrial production increased 4.7% year-on-year in October, sharply down from September’s 5.8% expansion and undershooting analysts’ expectations of a 5.4% rise. The reading was led by sizeable decelerations in mining and manufacturing output. The energy sector, however, posted an acceleration in the same month

On a month-on-month seasonally-adjusted terms basis, industrial production increased 0.17% in October, down from the 0.71% expansion in September. Annual average growth in industrial production, meanwhile, inched down from 5.7% in September to 5.6% in October.

Against this backdrop, Iris Pang, Greater China economist at ING, comments that:

“Industrial production of vehicles (-11.1%YoY) and smartphones (-7.3%YoY) show how the trade war has affected exports as well as local demand. Vehicles and smartphones share two similar features; they are both expensive and demand for new models from consumers is low without an obvious reason to upgrade. As demand is weak, production shrinks as inventory must be sold. It's not all bad though. Production of integrated circuits grew 23.5%YoY in October and we expect this to remain strong due to the production of 5G parts and products.”

FocusEconomics Consensus Forecast participants expect industrial production to rise 5.2% in 2020, which is down 0.1 percentage points from the previous month’s forecast. In 2021, the panel also sees industrial production growth at 5.2%.


Author: Ricard Torné, Lead Economist

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China Industry October 2019 0

Note: Year-on-year variation of industrial production index and annual average growth rate in %. Owing to seasonal factors related to the Lunar New Year, annual figures in January and February are reported together.
Source: National Bureau of Statistics of China (NBS) and FocusEconomics calculations.


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