China: Continued fall of PPI inflation signals weakening domestic demand - Nomura

Analysts at Nomura point out that China’s PPI inflation fell further to 3.3% y-o-y in October from 3.6% in September, consistent with market expectations (Nomura: 3.5%; Consensus: 3.3%).

Key Quotes

“The slowdown was again due to continued weakness in domestic demand and a high base last year (PPI inflation was 0.4% m-o-m compared to 0.7% m-o-m in October 2017).”

“PPI inflation in upstream sectors moderated broadly: in the raw material and processing sectors it fell to 6.7% y-o-y and 2.5%, respectively, from 7.3% y-o-y and 2.9% in September, while in the mining sector it edged up by a moderate 0.7 percentage points (pp) to 12.4% y-o-y.”