China: Robust data all around – BBH

Research Team at BBH, notes that the China’s industrial output rose 6.3%, a little better than expected and a bit faster than the 6.0% pace in July. 

Key Quotes

“Retail sales rose 10.6% after a 10.2% gain in July.  Fixed investment rose 8.1% in the first eight months.  This is steady from the rate reported in July, but it is a little above expectations.   

Some economists use power output to generate insight into growth, with the GDP figures seen as suspect.  Power output rose 7.8% in August from a year ago.  Just like capital investment in China has reached a point of diminishing returns, so too has energy output. There may be a gap between energy output and consumption.  It may also be that low energy costs have deterred efficiencies.  Also, the increase power output may reflect more industrial activity. 

One detail that caught our attention was China's steel output.  Recall that excess capacity in that industry is sufficiently salient to make it into the G20 statement.  Chinese officials have indicated intentions on shuttering some capacity.  They have around half of the world's steel capacity.  However, today's data showed steel output was 3% higher in the year through August.”