China's fourth quarter growth slows slightly--as expected

01/20/2014 4:27 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

U.S. financial markets are closed today, January 20, for Martin Luther King Day, but that doesn’t mean there’s no market-moving news.

The big story today is China where new numbers from the National Bureau of Statistics released overnight show GDP growth slowing to 7.7% year over year in the fourth quarter. That’s a slight drop fro the 7.8% growth rate reported for the third quarter, but it was slightly above the median estimate from economists surveyed by Bloomberg.

Other figures released today confirmed this slight slowdown in the quarter. Industrial production climbed 9.7% in December from December 2012. That was below analyst forecasts of 9.8% growth and the 10% annual growth rate reported in November. Retail sales increased 13.6% year over year, matching estimates. Investment in fixed assets grew by 19.6% in the year. That was below the 19.8% projected by economists and the 20.6% in 2012.

The pattern here isn’t one of big drops large enough to send the market into a downward spiral. But the stead miss, miss, miss in economic data from China is slowly eroding faith that the country’s economy will be able to meet the official target of 7.5% growth for 2014.

The consensus among analysts, according to Bloomberg, now calls for 7.4% growth for 2014. I expect that forecast to gradually drift slightly lower over the next few weeks.

Over night Japan’s Nikkei 225 index fell 0.59%, Hong Kong’s Hang Seng was down 0.88%, and the Shanghai Composite dropped 0.68%.

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