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Chinese September money data disappointing

Posted on Monday, October 14, 2013 at 04:07PM by Registered CommenterSimon Ward | CommentsPost a Comment

Chinese September money numbers cast doubt on hopes that the economy is regaining momentum.

Six-month growth rates of real M1 and M2 fell last month and have declined significantly since spring 2013, towards levels reached during the 2011-12 “hard landing” scare – see chart. This suggests that economic expansion will slow in late 2013 / early 2014 unless exports pick up on the back of stronger global activity.

Six-month real money growth, moreover, is below that of industrial output, based on an August number for the latter*. There appears, in other words, to be no “excess” liquidity available to boost asset prices.

The fall in real money expansion in September partly reflected a food-driven rise in inflation – likely to reinforce an official bias against further monetary policy easing at present.

*A September figure is due this week.

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