CN: Industrial Production


Mon Sep 12 21:00:00 CDT 2016

Actual Previous Consensus
M/M % Change 0.53% 0.52%
Yr/Yr % change 6.3% 6.0% 6.2%

Highlights
Chinese industrial production rose 6.3 percent on the year in August, just above the consensus forecast of 6.2 percent and up from 6.0 percent in July. This is the strongest monthly growth rate since March and comes despite government directives to close down factories temporarily in some provinces in August. This was reportedly done to reduce air pollution ahead of the G-20 summit held in Hangzhou last month.

This pick-up in headline year-on-year growth reflects a smaller fall in mining output in August, offsetting somewhat weaker gains in manufacturing and utilities production. Cement, steel products, coal and electricity all recorded stronger growth in August, offsetting a slightly lower (but still strong) increase in auto output.

Total industrial production rose 0.53 percent on the month in August, little changed from the July growth rate. In year-to-date terms, industrial production is up 6.0 percent compared with the same period last year.

Despite the improvement in August, industrial production growth remains well below averages reported in previous years. Relatively weak external demand and ongoing efforts by the government to restructure the Chinese economy continue to weigh on conditions in the China's industrial sector.

Definition
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.

Description
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.