According to NAB's economists minutes ago:
“When the Chinese data hit the screens today reporting the slowdown in not only year to growth in GDP but also the June month partials, it would have been easy to jump to the conclusion that growth was slowing much more sharply.
That talk is overdone. My colleague John O’Connor, NAB’s China analyst, has crunched through what the published year-to growth data imply for the momentum of recent growth and quite a different story emerges. It’s one of continuing growth momentum and not a large slowdown as could easily be misinterpreted from the YoY growth headlines
Summarising John’s analysis it’s along the following lines and speaks for itself:
GDP growth was 2¼% in June quarter, right in line with what our forecasts assumed and broadly in line with quarterly growth seen in recent quarters
Year-ended growth in industrial production fell to 13.7% which no doubt will get headlines. But on a monthly basis, growth in June is estimated at 2.0% following -1.1% in April and +0.7% in May. The reason for the fall in year-ended is because monthly growth last June is estimated at 4.5%
Retail sales were strong again, estimated to have risen by 1 1/2% in real terms in the month. This continues the trend of strong outcomes for the household sector
Nominal fixed asset investment was flat in June, but still is up 11% in the June quarter
CPI was 2.9% over the year to June. This seems largely due to easing food inflation that eased from 6.1% to 5.7%; non-food inflation continued at a more benign 1.6% in June
Overall, still very comfortable with our forecast of Chinese growth of 10 ½% for 2010, which assumes growth of around 2 to 2 ¼% in each of the next two quarters.”
