China Aug Industrial Output Slowdown Points to Weaker Economy

     BEIJING (MNI) - China's industrial output growth continued to slow in

August following a sharp decrease in July and came in well below market

expectations, adding to evidence that China's economy is slowing.

     Industrial output grew 6.0% on an annualized basis in August, below the MNI

survey median for 6.6% growth and also below the 6.4% and 7.6% growth rates in

July and June, the National Bureau of Statistics (NBS) said Thursday. The August

industrial output growth rate was the lowest this year.

     On a seasonally adjusted basis, industrial output increased 0.46%

month-on-month in July, above the rate of 0.41% in July but below June's 0.81%.

It was also lower than the 0.53% growth rate last August.

     For the January-August period, industrial output increased 6.7% on a

year-on-year basis, below the 6.8% growth during the January-July period.

     The National Bureau of Statistics (NBS) said that industrial output

remained "stable," and that the growth slowdown could be partly attributed to

impacts form the weather, including high temperatures and a significant amount

of rain during August.

     "As a whole, the national economy maintained a stable performance and

progress with good momentum for growth in August," the NBS said. "It showed

steady growth, structural optimization and improved quality."

     Industrial Research, a consultancy run by Industrial Bank, attributed the

slowdown to a decrease in infrastructure investment and external demand.

     Guosen Securities analysts, meanwhile, said in a report that the August

slowdown suggested that China's growth peak had passed, even though it said it

expected stronger September data because of quarter-end effects. 

     In August, output of state-owned enterprises increased 7.8% year-on-year,

higher than 6.7% growth in July and 3.6% growth last August.

     Output of share-holding companies grew 5.8% year-on-year, down from 6.7% in

July and also lower than 6.4% last August.

     In August, manufacturing sector growth was 6.9% year-on-year, higher than

the 6.7% gain in July and the 6.8% growth rate in August 2016.

     Mining sector output declined 3.4% year-on-year, down from the 1.3%

contraction in July and the 1.3% contraction posted last August.

     Production in the electricity, heating, gas, and water production and

supply sector rose 8.7% compared with the same period last year, lower than the

9.8% growth rate in July but higher than the 7.0% growth rate last August.

     Electricity production rose 4.8% year-on-year to 594.5 billion kilowatt

hours in August, compared with an 8.6% rise in July and 7.8% growth last August.

     Crude steel production continued to post new record highs, hitting 74.59

million tons in August for year-on-year growth of 8.7%, up from 74.02 million

tons in July, the previous record. Crude steel production grew 10.3% y/y in July

and 2.6% y/y in July 2016.

     The government's supply-side structural reforms were also reflected in the

output statistics.

     The production and sale of substandard steel products has been banned, and

the production capacity of coal had been cut 128 million tons by the end of

July, achieving 85% of the yearly target.

     The debt-to-asset ratio of large state-owned industrial companies was 55.8%

as of July, compared with 56.5% in the same period last year.

     High-tech and equipment manufacturing industries grew 12.9% and 11.6%

year-on-year in August, higher than the 12.1% and 10.7% growth rates,

respectively, in July.

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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