China’s Factory Output Hits 5 Month High

China’s activity data was stronger than expected in November, with factory output growth picking up to a five-month high, signaling that a flurry of stimulus measures from Beijing may have put a floor under a fragile economy.

Still, analysts believe more policy steps are needed to weather nagging headwinds from a cooling property market, risks from high domestic debt levels, and weak global demand as financial markets brace for interest rate rises by the U.S. Federal Reserve.

“Real interest rates are still high due to falling producer prices,” Wang Jun, senior economist at the China Centre for International Economic Exchanges (CCIEE), a Beijing-based think-tank.

“It’s still necessary to cut interest rates to support economic growth and combat deflation.”

Factory output grew an annual 6.2 percent in November, data from the National Bureau of Statistics(NBS) showed, quickening from October’s 5.6 percent and beating expectations of 5.6 percent.

Growth in China’s fixed-asset investment, one of the main drivers of the economy, rose 10.2 percent in the first 11 months, unchanged from the gain in January-October, and higher than an expected 10.1 percent rise.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza