Chinese Factory Gate Prices Point Towards Continuous Recovery, But Risks Remain

(C) Reuters.

By Gina Lee

Investing.com – The Chinese economy continued to show signs of recovery from the economic impact of COVID-19 as factory gate prices rose at the slowest annual pace since March, but fell for seventh consecutive month, in August.

Data from the National Bureau of Statistics (NBS) released on Wednesday said that the Consumer Price Index (CPI) rose 2.4% year-on-year and 0.4% month-on-month, down from July’s 2.7% and 0.6% respectively but hitting forecasted numbers prepared by Investing.com. Meanwhile, the Producer Price Index (PPI) fell 2% year-on-year, down from July’s 2.4% drop but also hitting its forecasted number.

The figures, combined with Monday’s trade data and the Caixin Purchasing Manager’s Indexes (PMI) released during the previous week, indicated that economic activity and manufacturing in the country continue to sustain recovery as the world’s second largest economy returned to growth in the second quarter as the country loosened strict COVID-19-induced lockdowns during the first quarter.

“In August, industrial production continued to improve while market demand kept recovering,” NBS senior statistician Dong Lijuan said in a statement.

“Prices for global commodities such as crude oil, iron ore and non-ferrous metals continued to rise, driving a rebound in domestic factory-gate prices,” he added.

Although the recovery in economic activity and consumer demand is expected to continue as COVID-19 comes under control in China, but risks to the outlook remain as the number of global cases continues to rise.

There are almost 27.5 million global cases as of September 9, according Johns Hopkins University data.