China Trade Tops Forecasts in Holiday-Distorted Month

China’s trade expanded more than estimated and a broad measure of credit rose to a record in a January that had five more working days than last year, helping sustain a rebound in the world’s second-biggest economy.

Exports gained 25 percent from a year earlier and imports rose 28.8 percent, government data showed today. Aggregate financing was 2.54 trillion yuan ($407 billion), including new local-currency loans of 1.07 trillion yuan that exceeded forecasts, while inflation was 2 percent.

China’s trade and credit data may indicate a strengthening economy, even as indicators in the first two months are distorted by the weeklong Lunar New Year holiday that was in January in 2012 and starts tomorrow for 2013. The new leadership, headed by Xi Jinping, is seeking to sustain a recovery without fueling inflation or spurring excessive financial risks from shadow banking and local-government debt.

“China’s growth recovery remains on track and inflation pressures remain manageable,” said Chang Jian, a Hong Kong-based economist at Barclays Plc who formerly worked for the World Bank. That is likely to add to “recent positive market sentiment,” she said.

The Shanghai Composite Index, China’s benchmark stock gauge, rose 0.6 percent. It has gained 24 percent since Dec. 3. The MSCI Asia Pacific Index of stocks fell 0.1 percent as of 6:01 p.m. in Tokyo.

M2 money supply rose 15.9 percent in January from a year earlier, the People’s Bank of China said today, exceeding the 14 percent median estimate in a Bloomberg survey of economists.

Trade Surplus

Export growth compared with the 17.5 percent median estimate in a Bloomberg News survey. Import gains exceeded the 23.5 percent median forecast. The trade surplus of $29.15 billion was above the $24.7 billion median projection and compares with a $27.1 billion excess a year ago.

“This strong export number cannot be fully explained by the Chinese New Year effect alone,” Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said in a note. “These data suggest that external and domestic demand are both strong, which supports our view that the economy is on track for a cyclical recovery” in the first half.

Adjusted for the number of working days, exports rose 12.4 percent in January from a year earlier while imports increased 3.4 percent, the customs administration said. The agency said last month that exports increased 14.1 percent in December and imports gained 6 percent.

Consumer-price gains slowed from a year earlier, in line with analyst forecasts, after a 2.5 percent pace in December, statistics bureau data showed today. The agency said the deceleration resulted in part from the timing of the holiday. Factory-gate prices declined 1.6 percent, the 11th straight drop.

Export Index

The customs administration today introduced an export managers’ index based on data from an online survey. The gauge was 37.5 in January, 3.3 points higher than in December and the second increase in a row, according to a statement which did not provide details about methodology. The rise in the gauge indicates a “relatively optimistic” outlook for foreign trade in the first quarter, the agency said.

Economic expansion is likely to pick up to 8.1 percent this quarter from 7.9 percent in the previous three months, according to a Bloomberg survey of analysts in January. The central bank said in its fourth-quarter monetary-policy report released Feb. 6 that growth momentum is “relatively strong” while highlighting concern that inflation risks will increase.

Chinese authorities have shown intention to prevent overheating and overinvestment, and the central bank’s next interest-rate move is likely to be an increase, Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, said in an interview with Bloomberg Television today.

‘Impressive’ Data

At the same time, there will be “very impressive macro data for the first quarter,” Lu said.

Separately, Japan posted back-to-back monthly current-account deficits for the first time since 1981, highlighting challenges for Prime Minister Shinzo Abe’s campaign to revive the economy. The shortfall in the widest measure of the nation’s trade was 264.1 billion yen ($2.8 billion) in December, the Ministry of Finance said in Tokyo today.

Elsewhere, the Reserve Bank of Australia cut its estimate for the nation’s economic growth this year, estimating a “below trend” pace of about 2.5 percent, compared with around 2.75 percent forecast in November. Consumer prices will rise 3 percent in the year through June 2013, compared with the 3.25 percent increase forecast three months earlier, the central bank said.

Germany Record

German exports rose in December, capping a record year even as the sovereign debt crisis weighed on euro-area demand. The U.S. will report its trade deficit narrowed to $46 billion in December from $48.7 billion the prior month, according to the median forecast of economists.

In China, a government-backed survey of purchasing managers released Feb. 1 showed manufacturing expanded for a fourth month in January and a separate gauge from HSBC Holdings Plc and Markit Economics rose to the highest level in two years, signs the growth recovery may be gaining strength.

Industrial production, retail sales and fixed-asset investment numbers for January will be combined with February data and published in March.

“A better reading of the coincident activity indicators will need to wait till March, with both January and February data becoming available,” Chang of Barclays said.

The median estimate in a Bloomberg survey for local-currency loans was 1 trillion yuan, compared with 738.1 billion yuan in January 2012 and 454.3 billion yuan in December. Aggregate-financing forecasts from five analysts ranged from 1.35 trillion yuan to 2 trillion yuan.

Loans tend to rise sharply in January as banks start using their new annual quotas and are normally eager to lend as soon as possible to generate interest income, according to Shen Jianguang, Hong Kong-based chief Asia economist at Mizuho Securities Asia Ltd.

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