Chinese industrial production rose 4.5 percent on the year in March, slowing from an increase of 7.0 percent on the year for January and February combined, and well below the consensus forecast of 6.0 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 fell 0.08 percent in March after advancing 0.56 percent in January/February.

Within the industrial sector, manufacturing output rose 6.7 percent on the year in March after increasing 7.7 percent in January and February combined. Utilities output and mining output rose 6.9 percent and 1.6 percent on the year respectively after increasing 7.9 percent and 2.3 percent respectively in the first two months of the year.

Officials characterised GDP and monthly data published today as showing that"the national economy continued the good momentum of rebound" and indicated that they see the current policy stance as appropriate. Officials also warned, however, that"the external environment is becoming more complex, severe and uncertain, and the foundation for stable and sound economic growth is not solid yet".

GDP data published today were stronger than consensus but monthly data were generally weaker than expected. The China RPI fell from plus 7 to minus 34 and the RPI-P fell from plus 30 to minus 27, indicating that recent Chinese data in sum are now coming in below consensus forecasts.

Year-over-year growth in industrial production in the combined months of January and February rose 7.0 percent which was up from 6.8 percent in December and sharply higher than the 5.0 percent consensus. Expectations for March is 6.0 percent.

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.