China Data Blast May Show Stronger Factories, Cooling Investment

(Bloomberg) -- A batch of China’s official economic indicators, due Thursday, is expected to signal improving consumption and factory output along with some softening in investment.

The official releases set for 10 a.m. in Beijing will show industrial production and retail sales both picked up while fixed-asset investment slowed slightly, according to economists surveyed by Bloomberg. That’s an outlook largely confirmed by private proxy indicators. Other reports from the central bank this week are forecast to show credit growth held up.

Robust growth this year provides ample room for authorities to curb financial risk ahead of the key 19th Party Congress next month. Factory inflation has remained buoyant, lifting global inflation and domestic sentiment. Rising incomes have also served as a buffer, while investment is expected to wane the rest of the year amid cooling property markets.

"China’s economy has continued to expand rapidly so far this year," Mark Williams, chief Asia economist at Capital Economics Ltd. in London, wrote in a recent report. "But credit growth has been slowing for a while and policy makers are still tightening up on financial sector risks. As such, economic growth looks set to slow."

Here’s what forecasters expect August data to show as of late Tuesday:

• Industrial output rose 6.6 percent from a year earlier, versus 6.4 percent in July
• Retail sales growth accelerated to 10.5 percent from a year earlier from 10.4 percent
• Fixed investment grew 8.2 percent from a year earlier in the first eight months, edging down from 8.3 percent in first seven months
• Credit data usually released mid-month will show aggregate financing, a broad gauge of new credit, rose to 1.28 trillion yuan ($196 billion) from 1.22 trillion yuan in July

From China’s malls to its humming online shopping sites, sales may be getting a lift from consumers with looser grips on their wallets. Sentiment among consumers and households was the strongest in two decades in July, according to the National Bureau of Statistics. A similar private gauge by Nielsen Holdings Plc climbed to the highest since at least 2009 in the second quarter on increased optimism about job prospects and personal finances.

Read More: China’s Consumers Haven’t Been This Confident in Two Decades

Still, one consumer confidence gauge compiled from data supplied by China UnionPay Co., operator of the nation’s dominant bank card network, edged down in August from July.

Here’s what other alternative indicators signal about the economy for August:

• The earliest indicators, including satellite images and surveys of smaller firms, show confidence strengthened, but sales managers were less upbeat
• International financial market experts were slightly more upbeat on China, according to a survey by the China Economic Panel, a joint project of The Centre for European Economic Research (ZEW) in Mannheim, Germany and Fudan University in Shanghai
• Construction activities appeared largely steady on infrastructure spending: excavator sales jumped 99 percent in August from a year earlier, slightly slower than in July
• Property sales volume may have dropped last month from July, in a usual late-summer slowdown, while increasing from a year earlier, according to a Bloomberg index that tracks washing machine output to forecast real-estate momentum
• Spending at luxury hotels and restaurants stabilized, UnionPay transaction data show
• Another gauge of consumption, retail auto sales, increased 5.8 percent from a year earlier in August, versus a 5.5 percent rise the prior month

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net.

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Jeff Kearns, Henry Hoenig

With assistance from Xiaoqing Pi