ecns [expanded by feedex.net]: Rebounds set to be key word in July data

ecns [expanded by feedex.net]

ecns

Rebounds set to be key word in July data
http://www.ecns.cn/business/2013/08-07/76296.shtml
Aug 7th 2013, 02:25



2013-08-07 11:25 Shanghai Daily Web Editor: qindexing


Key Chinese economic data for July, which are to be released starting tomorrow, are likely to feature rebounds - but rebounds merely in figures rather than in real business activity, analysts said.


Lu Zhengwei, chief economist at the Industrial Bank, said the possibly stronger numbers would largely be a result of the lower comparative base. "We expect nearly all figures to rise in July, and data in the next few months may fluctuate a lot due to the base changes," Lu said.


He forecast the Consumer Price Index, the main gauge of inflation, may expand 2.8 percent year on year, up from June's 2.7 percent increase, which was a four-month high.


The Producer Price Index, the factory-gate measurement of inflation, may fall 2.2 percent in July, narrowing from the drop of 2.7 percent a month earlier.


The most noticeable rebound may be in July trade figures. Lu projected exports to advance 12 percent, reversing the decline of 3.1 percent in June. Imports, in Lu's opinion, will also have rebounded to an 11 percent gain from the loss of 0.7 percent a month earlier.


"Demand in Europe and the United States is recovering with their stronger economic performance, which improves China's trade," Lu said. "But the biggest reason for the change remains the low comparative base."


China's economy has been stuck in a weak recovery, with growth easing to 7.5 percent in the second quarter from 7.7 percent in the first three months. Besides, the particularly hot weather in July also hit businesses, analysts said.


"This summer has not been quiet for China," said Zhu Haibin, chief economist at JPMorgan. "The interbank liquidity stress in June is still generating market concern over China's financial risks, while economic data remain on the soft side."


Zhu said policy uncertainty persists, but that the situation may be starting to change.


The authorities last month tried to restore market confidence via clarifications on policies. Premier Li Keqiang reiterated this year's growth target of 7.5 percent, with a growth floor of 7 percent.


In addition, some modest reform measures, such as tax cuts for small firms and more investment in infrastructure construction, were announced.


Lian Ping, chief economist at the Bank of Communications, said China's economic performance may stabilize in the second half due to the gentle policy easing.


The bank also estimated China's CPI will have increased by 2.8 percent in July. But its projection of trade was much more modest than Lu's. BoCom said exports may have risen 3 percent and imports by 1.9 percent.





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