China: Output growth of the manufacturing sector continued to slow - Nomura

China’s September IP growth of 5.8% y-o-y (Consensus: 6.0%; Nomura: 5.9%) was much weaker than the average growth rate of 6.5% in January-August this year (2017: 6.6%), explains the research team at Nomura.

Key Quotes

“The slowdown was weighed upon by the manufacturing sector, the output growth of which fell to 5.7% y-o-y in September from 6.1% in August. Mining sector output growth rose to 2.2% from 2.0% and utility sector output growth rose to 11.0% from 9.9%. In month-on-month terms, IP growth remained at 0.5%, unchanged from August.”

“Output growth of industrial products largely slowed. Growth of power generation moderated to 4.6% y-o-y in September from an average of 7.7% y-o-y in January-August (2017: 5.9%), production growth of industrial robots fell sharply to -16.4% from 19.4% in January-August (2017: 81.0%), and production growth of new energy cars slowed to 50.0% from 56.0% (2017: 51.2%).”

“Growth of delivered value for exports remained solid, albeit slowing slightly to 11.7% y-o-y from 12.5% in August, and we expect it to remain resilient over the rest of 2018 but face downside challenges next year.”