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A series of economic releases from China this week will keep market participants on their toes for signs of any further slowdown that would likely influence demand for industrial metals and other raw materials.
The world’s second-largest economy, and ravenous consumer of resources, publishes its initial estimate for third-quarter gross domestic product on Tuesday.
Data last week showed that the country’s export growth slowed and inflation eased, signs that the government’s cycle of interest rate increases – five in the past year – and rises in reserve requirements at several banks, are beginning to take hold. Third-quarter GDP is seen easing to 9.3 per cent from 9.5 per cent in the second quarter.
“This is still a strong growth rate, and despite the external turmoil, we believe China can still achieve 8-9 per cent growth in the coming quarters thanks to resilient consumer spending and strong fixed investment growth,” say HSBC analysts.
Industrial production, also published on Tuesday, is expected to have slowed too. Some rebalancing of China’s economy has taken place and so domestic consumption is expected to take up some of the slack from slowing global demand. Nevertheless, September output is seen climbing at an annual rate of 13.4 per cent, down fractionally from August’s 13.5 per cent rise.
Evidence that domestic consumption has increased will probably be reflected in the September retail sales data, also due out on Tuesday. Expected annual growth of 17 per cent is just fractionally shy of the 17.1 per cent seen in August.
Inflation figures are due from both the UK and US. UK consumer prices, released on Tuesday, are forecast to reach 4.9 per cent for September, up from August’s 4.5 per cent, and close to where the Bank of England expects the peak.
More from the Bank – particularly the reasoning behind its £75bn quantitative easing extension – will be published on Wednesday in the minutes of its October meeting.
US consumer prices, meanwhile, are seen holding flat at 3.8 per cent year on year. American industrial indicators will also be released. On Monday, the Empire State manufacturing survey in the New York Federal Reserve region is expected to show an improvement from September’s disappointing report. On the same day, industrial production is seen edging higher too.
The Philadelphia Fed index slumped to -30.7 in August and then recovered to -17.5 last month. Further improvement is likely this month, with the average forecast expecting the index to climb to -9.5, although this remains weak.
Sentiment surveys in Germany have been sliding sharply in recent months, but will probably include some of the recent improvement in economic confidence seen in the markets last week, which should help slow the decline.
The October ZEW index of economic expectations published on Tuesday is expected to hold steady around the -43.3 level hit last month, while Friday’s Ifo index of business confidence is seen edging marginally lower to 106.6 from 107.5 in September.