I’ve been skipping a lot of data releases this month because work, and because of course with the elections a month away, there are more important topics to look at.
Nevertheless, the economy waits for no man, and this development is interesting enough to warrant a look (log annual and monthly changes; seasonally adjusted):
Frankly, February’s industrial production data sucked, too put it mildly. The main index fell 4.5% in log terms from last year and was 1.4% lower from January’s level.
This could, with some justice, be put down to the CNY effect, except that electricity production rather unusually dropped sharply as well. Historically, that has almost never happened outside a recession, so I’m a little concerned that this might turn out a little more serious than the overall picture suggests.
On the other hand, the IPI has been suggesting economic growth is higher than it should be i.e. it’s underestimating the level of economic activity. That’s because last year’s growth was largely supported by investment and using goods produced overseas (aka imports) rather than domestic production.
This could be the case again (log annual changes):
The current quarter IPI is suggesting 1Q2013 growth at just 3.3% (standard error of 1.1%), which sounds on the low side to me. The weighted average forecast on the other hand is a more palatable 5.8% (s.e. 0.5%), which sounds a tad too high.
I’d still err towards thinking GDP growth will come in a little on the low side, though given last quarter’s growth surprise, I wouldn’t put it past the economy to pull another fast one.
February 2013 Industrial Production Index report from the Department of Statistics (warning: pdf link)