Chinese Q3 GDP data beats expectations

Tuesday, October 21, 2014

China’s third quarter GDP growth rate exceeded expectations, accelerating 7.3% y/y as data indicated improving export demand and an expanding services sector propped up growth. GDP growth was slightly above the 7.2% y/y rate expected by market participants according to a Bloomberg poll and went some way to quieten the support for further government stimulus measures. Industrial production also surprised on the upside, increasing 8.0% y/y in September against expectations of a 7.5% increase. Retail sales faltered slightly as growth slowed to 11.6% y/y, down from 11.9% y/y the month before but overall the data came in better than expected.

However, with the growth rate slowing from 7.5% y/y the previous quarter and the third quarter of 2014 seeing growth register its slowest expansion since the first quarter of 2009 the need for further stimulus measure has not disappeared completely. Fixed asset investment slipped to 16.1% in September from 16.5% the previous month marking the third consecutive month of slowing investment and the slowest rate since 2001. While the PBOC have avoided further cuts to the benchmark interest rate, showing broad policy restraint, the compounding worries in Europe and any signs of faltering growth in the US will exacerbate the situation in China and the world’s second largest economy will need to adjust targets accordingly.

The dollar index slipped to a close back below 85.00 yesterday as the better than expected Chinese economic data curbed prospects of further wide scale stimulus measures from central bankers. Early gains saw the DXY rally towards 85.375 before the bulls gave way to selling pressure, sending the index 0.4% lower from the open to end the session at 84.953. Scant US macro data releases today, with only existing home sales providing any insight, we could see major benchmark indices struggle with direction as stock futures across Europe and the US are mixed.  

Chinese Q3 GDP growth beats expectations but eases q/q

CNGDPYOY Index China GDP Consta 2014 10 21 07 53 10

Fixed investment slows to its lowest level this year

CNFAYOY Index China Fixed Asset 2014 10 21 07 53 30

Events for today

0230

CN

Sep

Retail Sales

0230

CN

Sep

Industrial Production

0230

CN

Q3

GDP

0930

UK

Sep

PSNCR & PSNB

1500

US

Sep

Existing Homes Sales

Topics: GDP, Central Bank, DXY
More from: Kash Kamal