China’s industrial output and retail sales exceeded forecasts last month while inflation rebounded from a 33 month low in signs the economic recovery is accelerating.
Factory production climbed 10.1 percent last month from a year earlier, the Chinese National Bureau of Statistics said yesterday in Beijing, compared with the 9.8 percent median estimate of analysts.
Retail sales growth accelerated to 14.9 percent, while the consumer price index rose 2 percent from a year earlier.
The reports may reassure China’s new leadership, which is to be headed by Chinese Vice President Xi Jinping (習近平), that growth in the world’s second-largest economy, which has slowed for seven quarters, will exceed the government’s target this year. The data may also reduce the odds of additional fiscal or monetary easing to support expansion.
“The Chinese economy is now in a sweet spot and can stay in the sweet spot” through the first half of next year, Lu Ting (陸挺), head of Greater China economics at Bank of America Corp in Hong Kong, said in a note yesterday. “The current macro backdrop should bolster asset prices from equities to commodities.”
China’s benchmark stock gauge, the Shanghai Composite Index, rose 4.1 percent last week, the most in a year, on expectations the recovery will gather pace and as the Chinese Communist Party politburo signaled an increased focus on urban development.
The rise in retail sales compared with the 14.6 percent median estimate of analysts surveyed by Bloomberg News.
Fixed-asset investment excluding rural households in the first 11 months of the year rose 20.7 percent, the same pace as in the January-October period. Economists had forecast a 20.9 percent gain.
Output of rolled steel rose 16.5 percent last month from a year earlier, up from an 11.7 percent pace in October, while electricity production increased the most since February, government data showed.
Industries with accelerating growth included telecommunications and computers, ferrous metal smelting and pressing and general purpose equipment, according to the statistics bureau.
“Growth is on track to rebound sharply” above 8 percent this quarter, said Zhang Zhiwei (張智威), chief China economist at Nomura Holdings Inc in Hong Kong.
Inflation probably “bottomed in October and will likely rise further in December and 2013, as growth picks up and adds inflationary pressure,” Zhang said.
Consumer inflation compared with the 2.1 percent median estimate in a survey of 35 economists and a 1.7 percent gain in October. Producer prices fell 2.2 percent, the ninth straight drop, while the pace of the decline moderated for a second month. Deflation eased in costs for mining, raw materials and manufacturing, the statistics bureau said.
Consumer-price gains have slowed from a three-year high of 6.5 percent in July last year and have stayed below the government’s target of 4 percent since February.
“Chinese authorities will continue to guard against the inflation risk in 2013,” Liu Li-gang (劉利剛), chief Greater China economist at Australia & New Zealand Banking Group Ltd in Hong Kong, said in a note yesterday.
Investment spending and high food prices will help inflation “re-emerge” in the second half of next year, and the central bank will have to pay more attention to managing price expectations, Liu wrote.