Chinese data expected to show falling trade surplus

By Gavin Jackson in Berlin. This article originally appeared on the Financial Times website, FT.com on September 7th, 2014

Western markets might be fortunate that this will be a quiet week in terms of data given that last week saw startling intervention from the European Central Bank while US job numbers surprised on the downside and worries about the impact of Scottish independence sent jitters through British markets.

Instead, this week’s highlights are mostly in Asian markets with a swath of data released on the Chinese economy and notable releases for Japan.

China’s trade balance for August will launch the week. Last week, both the official Purchasing Manager’s Index and HSBC’s unofficial index pointed towards a slowdown in China’s manufacturing sector in August. The consensus prediction is that the trade surplus will also have fallen in August to $40bn from $47.3bn in July, on the back of slowing export growth and accelerating import growth.

Inflation figures for the second-largest economy in the world will be published on Thursday. The prediction is for a slowdown in the rate of price increases; the year-on-year figure is expected to fall to 2.2 per cent, down slightly from last month’s 2.3 per cent. This is thought to be due to slightly weaker demand and falling input prices – the Producer Price Index is expected to fall by 1.9 per cent.

Finally, this Saturday industrial production, retail sales and urban fixed asset investment figures will be released. All three measures are expected to show a slight slowdown on the previous months’ figures adding to the impression that the pace of economic growth in China might be slowing.

Estimates of Japan’s current account – released on Monday – are expected to show that the country moved into a surplus in July from a deficit in June. This is thought to be due to a big increase in foreign income: the trade deficit is expected to widen. The final estimate of Japanese second-quarter gross domestic product is out the same day and is predicted to show that the impact of April’s rise in the consumption tax was even larger than originally thought, with the rate of growth revised downwards to -1.8 per cent from -1.7 per cent.

For the US, the highlight this week will be Friday with both retail sales and the University of Michigan confidence survey being released. Both are expected to show a slight uptick with retail sales growing by 0.3 per cent compared with last month’s stagnation and the confidence survey showing growth from 82.5 to 83.0.

In the UK, the highlight is likely to be on Wednesday with the trade balance, manufacturing production and industrial production figures all released. All three are expected to show slight improvement, except for the month-on-month growth in industrial production which is forecast to slow slightly.

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