China’s eco­nomic pulse holds up as mar­ket woes widen

The Pak Banker - - BUSINESS -

Some of the ear­li­est in­di­ca­tors of China's econ­omy are point­ing to fur­ther sta­bil­i­sa­tion, un­der­scor­ing the gulf be­tween mar­ket panic and what's hap­pen­ing on the ground.

Smaller busi­nesses in the ser­vices sec­tor showed more re­silience, while man­u­fac­tur­ing ex­pe­ri­enced a fur­ther de­te­ri­o­ra­tion - a con­tin­u­a­tion of the re­bal­anc­ing theme that marked 2015. Search en­gine data on in­ter­est in small and medium sized busi­nesses sig­nals mo­men­tum there re­mains steady, while a sep­a­rate read­ing of busi­ness con­fi­dence held up as firms get a boost from a weaker cur­rency.

The fresh­est re­ports - which come ahead of the first of­fi­cial in­di­ca­tors of man­u­fac­tur­ing and ser­vices ac­tiv­ity due on Fe­bru­ary 1 - add to ev­i­dence the world's se­cond-largest econ­omy is hold­ing up as a stronger ser­vices sec­tor un­der­pins the la­bor mar­ket. That's wel­come news for pol­icy mak­ers bat­tling slower growth, cap­i­tal out­flows and plung­ing shares that have shaken in­vestor con­fi­dence world­wide at the start of the year.

The Bloomberg monthly GDP tracker was 6.69 per cent in De­cem­ber, down slightly from the prior month and just shy of the of­fi­cially an­nounced 6.8 per cent ex­pan­sion in the fourth quar­ter. Other prox­ies show a mixed pic­ture, ac­cord­ing to a re­port on Mon­day by Tom Or­lik, chief Asia econ­o­mist at Bloomberg In­tel­li­gence in Bei­jing.

Ox­ford Eco­nom­ics es­ti­mated growth was 6.1 per cent in the fourth quar­ter, while Bar­clays fig­ured 5.6 per cent, his note said. Cap­i­tal Eco­nom­ics cal­cu­lated growth at 'just over' 4 per cent based on its proxy gauge track­ing freight vol­umes, pas­sen­ger num­bers, elec­tric­ity out­put, sea cargo vol­umes and floor space area un­der con­struc­tion. As for Jan­uary, here's what the econ­omy's ear­li­est tea leaves are show­ing:

Two pri­vate in­dexes based on sur­veys cov­er­ing more than 4,000 com­pa­nies are now back af­ter a one-month sus­pen­sion dur­ing which the pub­lish­ers tweaked their method­olo­gies. The gauges pub­lished jointly by China Min­sheng Bank­ing Corp and the China Academy of New Sup­ply- side Eco­nom­ics show more di­ver­gence be­tween ser­vices and man­u­fac­tur­ing.

The Minxin non- man­u­fac­tur­ing in­dex for smaller com­pa­nies climbed to 43 from 40.9, head­ing back to­ward the 50 line that di­vides be­tween im­prov­ing and de­te­ri­o­rat­ing con­di­tions.

The gauge for small man­u­fac­tur­ers showed less prom­ise, fall­ing to a record low 41.8 in Jan­uary.

Baidu's in­dex of how of­ten its search en­gine serves up queries into small- and medium- sized com­pa­nies re­mained steady in the "slightly pros­per­ous" range in Jan­uary. The pre­lim­i­nary read­ing of an in­dex from the Bei­jing-based com­pany stayed at 100.1, the same as De­cem­ber's fi­nal read­ing. De­cem­ber's read­ing was the first in 10 months to climb above 100, the di­vid­ing line be­tween pos­i­tive and neg­a­tive read­ings.

Baidu also fore­casts the govern­ment's of­fi­cial man­u­fac­tur­ing PMI in Jan­uary and Fe­bru­ary will rise above 50. The gauge has re­mained below that level for five months through De­cem­ber.

An­other in­di­ca­tor based on a monthly sur­vey of sales man­agers for medium and large pri­vate- sec­tor com­pa­nies edged down to 51 in Jan­uary from 51.4 in De­cem­ber. Sub-gauges from re­search firm World Eco­nom­ics show busi­ness con­fi­dence and re­cruit­ment fell to all­time lows, while sales and pro­duc­tion in­dexes in­di­cate "con­tin­u­ing but in­creas­ingly mod­est" ex­pan­sion.

"Chi­nese eco­nomic growth con­tin­ues, but at a much slower rate than a year ago," the Lon­don-based in­sti­tute's re­searchers wrote in their Jan­uary 20 re­port.

Mar­ket News In­ter­na­tional's gauge of cur­rent busi­ness con­fi­dence fell slightly to 52.3 in Jan­uary from 52.7 in De­cem­ber. The monthly poll of Chi­nese com­pa­nies listed on the Shang­hai and Shen­zhen ex­changes found firms were helped by the yuan's de­pre­ci­a­tion.

"While there are height­ened risks, over­all sen­ti­ment among busi­nesses re­mained rel­a­tively re­silient in Jan­uary, with out­put and or­ders mea­sures ac­tu­ally tick­ing higher," MNI In­di­ca­tors Chief Econ­o­mist Philip Uglow said in a state­ment. "It points to a more op­ti­mistic, or at least less pes­simistic out­look, than cur­rent doom- laden head­lines."

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