China's Surging Excavator Sales May Have Already Peaked

(Bloomberg) -- Sales of earth-moving equipment in China jumped 99 percent in August from a year earlier, a sign on-the-ground investment and construction activity in the world’s second-biggest economy is still going strong.

In fact, the ratio of spending on road, rail and other infrastructure to total investment is higher than during the global financial crisis, according to analysis by Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing.

But this may be as good as it gets. Sales growth has slowed from 109 percent in July, data compiled by Hong Kong Teng Yuan Co. shows, while at the provincial level, sales in Jiangsu and Shandong -- two of the biggest buyers -- decelerated to 80 percent and 67 percent respectively after more than doubling in July.

Sales growth could moderate to as little as 30 percent in the second half, according to Bloomberg Intelligence. At the same time, sales growth rates for excavators and heavy trucks are diverging after an 80 percent correlation over the past four years. Still, that may reflect the impact of stricter emissions standards than signaling anything else, BI says.

With assistance from Enda Curran, Xiaoqing Pi

Bloomberg
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