China August Industrial Output Rises 10.4%

China?s industrial output grew at the fastest pace in 17 months in August, adding to signs of a rebound this quarter that include a pickup in export gains.

Factory production rose 10.4 percent from a year earlier, the National Bureau of Statistics said in a statement in Beijing today, compared with a median forecast of 9.9 percent in a Bloomberg News survey. Retail sales advanced 13.4 percent, while fixed-asset investment excluding rural households increased 20.3 percent in the January-August period, both topping estimates.

Today?s data suggest Premier Li Keqiang?s measures from tax cuts to extra spending on railways have helped halt a two-quarter slowdown in the world?s second-biggest economy. Li?s government has signaled that it will defend its 7.5 percent expansion goal while cutting overcapacity and squeezing shadow banking to limit financial risks.

?All the economic data published since July have been quite positive, showing a noticeable short-term recovery,? Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said before the release of today?s figures. ?Demand is picking up on the ground.?

The benchmark Shanghai Composite Index extended gains after today?s data and was up 0.7 percent at 1:42 p.m. local time.

The government doesn?t release separate industrial data for January and February, which are distorted by the Chinese New Year holiday.

Estimates for industrial-production growth from 45 analysts ranged from 9.2 percent to 10.2 percent, according to a Bloomberg News survey, following a 9.7 percent gain in July. The median estimate for retail sales was a 13.3 percent advance after 13.2 percent in July.

Investment Estimates

Fixed-asset investment was projected by economists to rise 20.2 percent in the January-August period, after a 20.1 percent gain in the first seven months of the year.

China?s exports rose 7.2 percent from a year earlier, the General Administration of Customs said Sept. 8. That exceeded the 5.5 percent median estimate of analysts. At the same time, imports rose a less-than-estimated 7 percent from a year earlier, leaving a trade surplus of more than $28 billion.

Consumer prices rose 2.6 percent in August, the statistics bureau said yesterday, leaving room for extra stimulus if needed. The producer-price index (SHCOMP) fell 1.6 percent, the least since February.

Premier Li, in an opinion article published yesterday in the Financial Times, said the economy ?will maintain its sustained and healthy growth,? with expansion around a 7.5 percent ?lower limit? intended to ensure steady growth and employment.

Growth Forecast

Goldman Sachs Group Inc. last week raised its estimate for China?s economic growth for the third and fourth quarters, citing improving global demand and a stronger-than-expected domestic industrial recovery. JPMorgan and Deutsche Bank AG raised their growth forecasts over the past month, bolstering optimism that Li will meet the government?s target for expansion this year.

Analysts surveyed by Bloomberg News last month gave a median estimate for 7.5 percent expansion this quarter and 7.3 percent in the October-December period.

China?s top solar-panel makers are returning to profitability following two years of losses as higher demand and prices drive up margins. JinkoSolar Holding Co. last month reported second-quarter net income of $8 million, its first profit since the third quarter of 2011, as sales jumped 43 percent from a year earlier.

In other economies today, France will report on industrial production, while Italy releases final figures for second-quarter gross domestic product, forecast to show a contraction.

To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net