China's Industrial Production Full Steam Ahead In January-February

China's industrial production and retail sales jumped much higher than expectations in January and February - buoyed by increased consumption and a return to normal for pandemic-stricken local manufacturers.

Production rose 35.1% year on year in the first two months of 2021, according to data from the National Bureau of Statistics - higher than a market consensus of 30%.

"Industrial production in China has continued the trajectory with faster improvement than the rest of the economy," Natixis senior economist Gary Ng told Business Times Monday.

The manufacturing sector saw the largest leap in production levels at 39.5% in January and February compared with 7.7% in December.

"After removing the base effect, the growth of main indicators is stable," the government said in a statement. Macro indicators are in a "reasonable range," according to the National Bureau of Statistics.

The government published data for the first two months of the year as one to reduce the influence of Lunar New Year-related uncertainties.

"The key improvement comes from a cyclical rebound in the manufacturing sector as the supply chain was seriously disrupted last year - such as automobile and machinery," Ng said.

Metals and commodities have received a welcome boost with higher producer prices, according to the economist.

The continuing coronavirus pandemic inflicted deep wounds on China manufacturing and production lines. China's industrial output rose by just 2.8% last year.

"The latest data in China shows there is a strong rebound in all aspects," said Ng.

In the first two months of 2020, retail sales jumped 33.8% - above expectations though still lagging behind industrial production - with biggest improvements in the catering and transportation segments.

"However, the downside risk is that the fall in unemployment rate is weaker than expected and the growth of rural spending is still trailing behind urban spending," Ng said.

Consumption, while higher than last year, has been slower to return - making disposable income growth an important measure in gauging China's economic renewal.