CN: Industrial Production

Wed Aug 12 00:30:00 CDT 2015

Consensus Actual Previous
Yr/Yr % change 6.5% 6.0% 6.8%
M/M % Change 0.32% 0.64%

New data show industrial production slowed in July to a pace of 6 percent on the year, its weakest since April and down from 6.8 percent in June (which was its best reading since December). Year to date, output was up 6.3 percent for a second month. Analysts had anticipated a pace of 6.6 percent. Output increased 0.32 percent from June.

Motor vehicle output plunged 11.2 percent from a year ago after edging up 0.7 percent in June. Most sub-categories were weaker than in June. Communication edged up to an increase of 9.4 percent from 9.2 percent the month before. Among the industries that were weaker in July were textiles, chemicals, non-metal minerals, ferrous metals, machinery and transport equipment.

The figures offer more evidence of a renewed slowdown in China's economy. An earlier reported slowdown in exports was widely cited as a key reason persuading the People's Bank of China to change the way it values the renminbi, resulting in a 4 percent depreciation in the currency this week. The PBoC has said it acted to give more voice to markets.

Industrial production measures the change in the total inflation adjusted value of output produced by manufacturers, mines and utilities. Data are compared with the same month a year earlier.

Chinese data can have a broad impact on the currency markets due to China's dominant influence on the global economy and investor sentiment. It's a leading indicator of economic health. Production is the dominant driver of the economy and reacts quickly to ups and downs in the business cycle. No data are published in February for January.

The industrial growth rate is used to reflect a certain period of increase or decrease in volume of industrial production indicators. The indicator can be used to estimate the short term trend of the industrial economy, to judge the extent of the economic boom and also to be an important reference and basis for the formulation and adjustment of economic policies.