Chinese industrial production rose 7.0 percent on the year for January and February combined, up from growth of 6.8 percent in December and above the consensus forecast of 5.0 percent. Separate year-over-year data for January and February are not published because of the impact of differences in the timing of lunar new year holidays from year to year. In month-over-month terms, industrial production rose 0.56 percent in February.

Within the industrial sector, manufacturing output rose 7.7 percent on the year in January and February. Utilities output and mining output rose 7.9 percent and 2.3 percent respectively on the year in the first two months of the year.

Officials characterised today's data as evidence that"the national economy maintained the momentum of recovery and growth and got off to a stable start" for 2024. However, although industrial production and fixed asset investment both recorded stronger year-over-year growth in the first two months of the year relative to December, growth in retail sales weakened. PMI survey published since the start of the year have shown ongoing weakness in the manufacturing sector but modest growth elsewhere in the economy.

Today's monthly activity data for January and February combined were considerably stronger than consensus forecasts. The China RPI rose from minus 7 to plus 50 and the RPI-P rose from minus 13 to plus 60, indicating that recent Chinese data in sum are now coming in well above consensus forecasts.

Year-over-year growth in industrial production is expected to slow to 5.0 percent in the combined months of January and February versus growth of 6.8 percent in December.

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.