China GDP preview: Signs of stabilisation? – Nomura

By FXStreet FXStreet (Bali) – Ahead of today’s China GDP event, Nomura maintains its call for GDP growth at 6.7% for Q3 and 6.4% for Q4, slowing further to 5.8% in 2016.

Key Quotes

“Our read of the September high-frequency “pulse” data released so far suggests still weak production and investment growth, while consumption and retail sales may have turned better.”

“Positive signs: Export growth experienced a smaller year-on-year decline in September than August, while ordinary imports excluding key commodities also turned slightly better. Moreover, year-on-year growth of auto sales turned positive after falling for five consecutive months, following some policy easing measures.”

“Negative signs: Railway freight growth, which is highly correlated with industrial output growth, fell to -16.4% y-o-y in September from -15.3% in August. Also, the amount of coal consumed by six major power plants contracted year-on-year in September and October (first 16 days) after a short rebound in August. Steel prices are down about 27% y-o-y.”

“Overall, our verdict is that economic growth is still weak and, while there are some tentative signs that growth could stabilise in coming months, there is no sign of a durable rebound.”

“The data are largely consistent with our forecast of relatively stable but still weak …read more

Source:: FX Street