China Trade Tops Forecasts in Holiday-Distorted Month: Economy

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    By Bloomberg News - 2013-02-08T03:29:52Z

    China’s exports and imports rose more than estimated in a January that had five more working days than last year, helping sustain a growth rebound in the world’s second-biggest economy.

    Overseas shipments increased 25 percent from a year earlier, the customs administration said today, compared with the 17.5 percent median estimate in a Bloomberg News survey. Imports rose 28.8 percent, exceeding the 23.5 percent median forecast of analysts. Separately, Japan posted back-to-back monthly current- account deficits for the first time since 1981.

    China’s data may indicate a strengthening economy, according to Nomura Holdings Inc., even as indicators in the first two months are distorted by the weeklong Lunar New Year holiday that was in January in 2012 and starts tomorrow for 2013. The new leadership, headed by Xi Jinping, is seeking to sustain a recovery without fueling inflation or spurring excessive financial risks from shadow banking and local-authority debt.

    “This strong export number cannot be fully explained by the Chinese New Year effect alone,” Zhang Zhiwei, chief China economist at Nomura in Hong Kong, said in a note. “These data suggest that external and domestic demand are both strong, which supports our view that the economy is on track for a cyclical recovery” in the first half.

    The Shanghai Composite Index, China’s benchmark stock gauge, rose 0.4 percent as of 11:13 a.m. local time. It had gained 24 percent from Dec. 3 through yesterday. The MSCI Asia Pacific Index of stocks fell 0.3 percent as of 12:13 p.m. in Tokyo.

    Calendar Adjustment

    Adjusted for the number of working days, exports rose 12.4 percent in January from a year earlier while imports increased 3.4 percent, the customs administration said. The agency said last month that exports increased 14.1 percent in December and imports gained 6 percent.

    Estimates for export gains from 33 analysts ranged from 8.1 percent to 31 percent. Import growth compared with a 23 percent median estimate in the Bloomberg survey, out of a range of 8.5 percent to 39.6 percent. The trade surplus of $29.15 billion was above the $24.7 billion median projection and compares with a $27.1 billion excess a year ago.

    The customs administration today introduced an export managers’ index based on data from an online survey. The gauge was 37.5 in January, 3.3 points higher than in December and the second increase in a row, according to a statement which did not provide details about methodology. The rise in the gauge indicates a “relatively optimistic” outlook for foreign trade in the first quarter, the agency said.

    Growth Pickup

    Economic expansion is likely to pick up to 8.1 percent this quarter from 7.9 percent in the previous three months, according to a Bloomberg survey of analysts in January. The central bank said in its fourth-quarter monetary-policy report released Feb. 6 that growth momentum is “relatively strong” while highlighting concern that inflation risks will increase.

    Chinese authorities have shown intention to prevent overheating and overinvestment(:cool2:envy of the world), and the central bank’s next interest-rate move is likely to be an increase, Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, said in an interview with Bloomberg Television today.

    At the same time, there will be “very impressive macro data for the first quarter,” Lu said.

    Japan’s current-account deficits highlight challenges for Prime Minister Shinzo Abe’s campaign to revive the economy. The shortfall in the widest measure of the nation’s trade was 264.1 billion yen ($2.8 billion) in December, the Ministry of Finance said in Tokyo today.

    Australia Forecast

    Elsewhere today, the Reserve Bank of Australia cut its estimate for economic growth this year, estimating a “below trend” pace of about 2.5 percent for the nation, compared with around 2.75 percent forecast in November. Consumer prices will rise 3 percent in the year through June 2013, compared with the 3.25 percent increase forecast three months earlier, the central bank said.

    Germany and the U.S. will give trade data today and Italy reports industrial production. The U.S. trade deficit shrank to $46 billion in December from $48.7 billion the prior month, according to the median forecast of economists.

    In China, a government-backed survey of purchasing managers released Feb. 1 showed manufacturing expanded for a fourth month in January and a separate gauge from HSBC Holdings Plc and Markit Economics rose to the highest level in two years, signs the growth recovery may be gaining strength.

    The National Bureau of Statistics will release January inflation data at 1:30 p.m. Consumer-price gains may have slowed to 2 percent from a year earlier, compared with a 2.5 percent pace in December, based on the median analyst projection. Factory-gate prices probably declined for an 11th month.

    Data Combined

    Industrial production, retail sales and fixed-asset investment numbers for January will be combined with February data and published in March.

    The People’s Bank of China may also report January bank loans, aggregate financing and money supply as early as today. Lenders probably issued 1 trillion yuan of new credit, according to the median estimate in a Bloomberg News survey, compared with 738.1 billion yuan in January 2012 and 454.3 billion yuan in December.

    Industrial activity normally slows around the holiday, also known as Spring Festival, as factories close, while prices and retail sales may accelerate on festival-related spending, Chang said.

    Loans tend to rise sharply in January as banks start using their new annual quotas and are normally eager to lend as soon as possible to generate interest income, according to Shen Jianguang, Hong Kong-based chief Asia economist at Mizuho Securities Asia Ltd.

    The January data on inflation, trade and money supply are likely to be distorted by holiday effects and should be interpreted with caution, Ding Shuang, a Hong Kong-based senior China economist with Citigroup Inc., said in a note before the reports.
     
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