China industrial output, retail sales beat expectations, investment growth slows

China’s industrial output rose 6.6 percent in September from a year earlier. (Reuters)
Updated 19 October 2017
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China industrial output, retail sales beat expectations, investment growth slows

BEIJING: China’s industrial output growth accelerated to a three month high in September, while fixed asset investment growth continued to decline, falling to the slowest pace since December 1999.
Strong factory output and solid retail sales growth helped China’s economy meet expectations for 6.8 percent GDP growth in the third quarter, though a continued trend of weaker investment growth could raise concerns about growth going forward.
Industrial output rose 6.6 percent in September from a year earlier, beating expectations for 6.2 percent growth and up from 6 percent in August, data showed on Thursday.
Communication equipment output posted the biggest acceleration in growth in September, rising to 16.3 percent year-on-year from 13.0 percent in August.
But the government has also ordered some steel mills and factories in northern areas to cut back or halt production in coming months to reduce choking winter air pollution, which some analysts have said could hit the industrial sector.
Fixed-asset investment expanded 7.5 percent in the first nine months of the year, missing forecasts for 7.7 percent growth, and marking the slowest rate of growth since a 6.3 percent reading in December 1999, according to Reuters calculations.
Investment growth has slowed in recent years amid efforts by authorities to move away from investment-driven economic growth.
But private sector fixed-asset investment continues to lag state spending, slowing to 6.0 percent growth for Jan-Sept, compared to 11.0 percent growth in investment by state firms. Private investment rose 6.4 percent in the previous period.
Retail sales rose 10.3 percent in September on-year, beating expectations and indicating consumption continues to hold up well. Retail sales growth has hovered in the 10 to 11 percent range for the last two years.
Analysts had forecasted sales would rise 10.2 percent, slightly more than in August.
After a surprisingly strong start to the year, the world’s second largest economy is expected to easily meet or beat the government’s full-year growth forecast of around 6.5 percent.
But most China watchers expect activity will slow in coming months as higher financing costs and measures to cool the heated property market start to weigh on activity.


Global oil demand under threat from cleaner fuel

Updated 15 min 43 sec ago
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Global oil demand under threat from cleaner fuel

  • Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook
  • The IEA’s central scenario is for demand to grow by about 1 million bpd on average every year to 2025

LONDON: Electric vehicles and more efficient fuel technology will cut transportation demand for oil by 2040 more than previously expected, but the world may still face a supply crunch without enough investment in new production, the International Energy Agency (IEA) said on Tuesday.
Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook. The IEA’s central scenario is for demand to grow by about 1 million barrels per day (bpd) on average every year to 2025, before settling at a steadier rate of 250,000 bpd to 2040 when it will peak at 106.3 million bpd.
“In the New Policies Scenario, demand in 2040 has been revised up by more than 1 million bpd compared with last year’s outlook, largely because of faster near-term growth and changes to fuel efficiency policies in the United States,” the agency said.
The IEA believes there will be about 300 million electric vehicles on the road by 2040, no change on its estimate a year ago. But it now expects those vehicles will cut
demand by 3.3 million bpd, up from a previous estimated loss of 2.5 million bpd in its last World Energy Outlook.
“Efficiency measures are even more important to stem oil demand growth: Improvements in the efficiency of the non-electric car fleet avoid over 9 million bpd of oil demand in 2040,” the IEA said.
Oil demand for road transport is expected to reach 44.9 million bpd by 2040, up from 41.2 million bpd in 2017, while industrial and petrochemical demand is forecast to reach 23.3 million bpd by 2040, from 17.8 million bpd in 2017.
All global oil demand growth will stem from developing economies, led by China and India, while demand in advanced economies is expected to drop by more than 400,000 bpd on average each year to 2040, the IEA said.
The IEA, which advises Western governments on energy policy, maintained its forecast for the global car fleet to nearly double by 2040 from today, growing by 80 percent to 2 billion.
On the supply side, the US, already the world’s biggest producer, will dominate output growth to 2025, with an increase of 5.2 million bpd, from current levels of about 11.6 million bpd. From that point onwards, the IEA expects US oil production to decline and the market share of the Organization of the Petroleum Exporting Countries (OPEC) to climb to 45 percent by 2040, from closer to 30 percent today.
New sources of supply will be needed whether or not demand peaks, the agency said.
“The analysis shows oil consumption growing in coming decades, due to rising petrochemicals, trucking and aviation demand. But meeting this growth in the near term means that approvals of conventional oil projects need to double from their
current low levels,” IEA director Fatih Birol said.
“Without such a pick-up in investment, US shale production, which has already been expanding at record pace, would have to add more than 10 million bpd from today to 2025, the equivalent of adding another Russia to global supply in seven years, which would be a historically unprecedented feat.”