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Chinese inflation slows

Published: Wednesday 10 January 2018

  • Chinese data fails to reach targets
  • World Bank forecasts return to pre-crisis growth in 2018
  • UK manufacturing and industrial data positive
By  David Johnson

Chinese data fails to reach targets
Chinese factory inflation fell to its slowest pace since November 2016 in December 2017. Producer prices still rose 4.9% on the year, but that was sharply lower than the 5.8% we saw in November. It is a dampening effect that will show in consumer inflation data later, but it is also likely to impact the data for the countries that supply China. The consumer inflation data was also lower in December at 1.6% against the target level of 3.0% set by the Chinese authorities. So there is no chance of higher interest rates or tighter monetary policy anytime soon. Having said that, the US authorities will decide later this month whether to impose trade sanctions against China to try to diminish the massive trade imbalance between the two countries. That’s a story to follow.
World Bank forecasts strong
Elsewhere, the World Bank sees growth picking up this year to 3.1% and that’s as strong as the pre-crisis levels in 2006. Let’s hope they are right.
Canadian Dollar stays steady
We heard yesterday that Canadian Housing Starts fell, but not as sharply as many had forecast in December. The Sterling – Canadian Dollar rate remained steady.
Key UK data today
This morning brought UK manufacturing and industrial output data. The forecasts were poor, so Sterling slipped a little ahead of the 9.30 GMT release. Recent poor forecasts have often been bettered by the actual UK data, so don’t be surprised if the Pound recovers after better than expected numbers and another strong showing form UK manufacturing. We will also see the NIESR economic growth estimate for the three months to December at 13:00 GMT. A quarterly rise of 0.5% is forecast and that would be rather good news for the Pound. So be ready for that.

Australian Retail Sales expected overnight
The rest of the day is very quiet on the data side of things, but we will get Australian retail sales data overnight tonight and that is forecast to be a tad down on the November numbers. The Aussie Dollar has been holding steady of late amidst mixed data, but the Reserve Bank of Australia (RBA) is worried about overheating consumer activity and this is a very good indicator of that.
Talk to the hand…

And it must be tiresome being a politician and having to answer inane questions from reporters, but the Thailand Prime Minister adopted a very curious method of avoiding that particular hassle. Prayuth Chan-ocha ended a press briefing by bringing out a life sized cardboard image of himself and told the assembled press pack to ask their questions to the cut out before the real man walked off stage. It’s different; a fake PM, rather than fake news. 
A Trio of Short Jokes
  • I just realised I have superpowers. I melted an ice cube by just staring at it. It took a little longer than I thought it would, though.  
  • I was on the beach and a guy was in the sea shouting “Help…shark…help me…please!” I’m sorry but it doesn’t matter how polite you are, no shark is actually going to help you.
  • If you think that women are the weaker sex, try pulling the duvet back to your side.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Manufacturing Production 0.1% 0.3%
GBP 09:30 UK: Goods Trade Balance -10.8b -10.9b
GBP 09:30 UK: Industrial Production 0.0% 0.4%
GBP 13:00 UK: NIESR Gross Domestic Product Estimate 0.5% 0.5%
CAD 13:30 Canada: Building Permits 3.5% -0.7%
USD 13:30 US: Import Prices 0.7% 0.4%
USD 15:30 US: Crude Oil Inventories -7.4m -3.9m

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