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China trade, PPI, CPI in focus for signs of economic health

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While the U.S. election is set to hog the limelight this week, investors will likely take some time analyze key Chinese data for signs the country's economic health is on the mend.

While economists appear split on how the trade reading would look, expectations are for some pick-up in consumer and production inflation.

China's October Trade

The world's largest exporter will reveal trade figures for October on Tuesday (November 8), and some economists expect imports to fare better than in previous months.

"Most indicators suggest that domestic demand is still improving and import values will also benefit from the latest step up in commodity prices," Julian Evans-Pritchard and Chang Liu, economists at Capital Economics, said in a recent note.

Capital Economics forecast imports would return to positive territory, growing 2 percent on the previous year, but that exports would decline 7 percent on-year.

September trade data came in markedly below expectations; exports plunged 10 percent in dollar terms and imports slipped 1.9 percent, resulting in a trade surplus of $41.9 billion, down 29.5 percent from the previous year.

"A sudden turnaround this month (for exports) seem unlikely, (however) stronger growth in developed markets ... should at least prevent shipments from slipping further," Evans-Pritchard and Chang said.

Barclays' economics research unit, however, were less optimistic, saying in a Friday note that they expected China's exports to fall 6 percent year-on-year due to base effects. The consensus forecast for exports stands at 5.8 percent. Base effects refer to the impact an unusually high or low inflation result in the previous month has on the reading.

China October inflation

On Wednesday (November 9), China will release its Consumer Price Index (CPI) and Producer Price Index (PPI) for October.

"Consumer price inflation in China is picking up again, mostly because of a food price spike," Moody's Analytics economists said in a note on Friday. "That said, non-food inflation also shows signs of upward pressure, as the disinflation from energy fades and as the housing market heats up," the economists added, forecasting CPI would rise by 2.1 percent, in line with the consensus estimates.

Most economists also expect inflationary pressures to show in producer prices.

"The strengthening in the PPI is likely to have been driven by rising commodity prices, which will have a further positive impact on industrial profits," economists at ANZ Research said in a Friday note.

The overall steel price index rose 23.6 percent on-year in September, and in the same month coal prices also recorded their first positive on-year growth in three years, the ANZ economists said. ANZ Research expected PPI to rise 0.8 percent, below market consensus of a 1 percent increase.

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