China: Economy is holding up reasonably well - TDS

Analysts at TD Securities note that China’s Aug retail sales rose by more than expected at +9.0% y/y (consensus 8.8% y/y) versus 8.8% in July.

Key Quotes

“Industrial production rose 6.1% (consensus 6.1%) versus 6.0% in July. Fixed assets yoy grew less than expected at 5.3% (consensus 5.6%) versus 5.5% previously. There is not much implication from the China data aside from the fact that the economy is holding up reasonably well.”

“Stronger retail sales shows ongoing consumer resilience over recent months, while the pace of IP has been relatively constant. As yet, there is no obvious impact from US tariffs and perhaps there is some indication that the targeted easing is helping to cushion the economy.”

“From a CNY perspective, nothing here suggests that China will not continue to keep it on a relatively stable footing in trade weighted (CFETS) terms.”

“Given the combination of softer US CPI and softer USD, some renewed hopes of US/China trade talks (despite Trump’s tweets) and the bigger than expected Turkish rate hike, the data will add another layer of comfort for Asia FX including to some extent AUD and NZD.”