Good news apparent from China
China’s next batch of official indicators are expected to signal broadly steady output, while alternative data are showing robust economic activity.
beijing — China’s next batch of official indicators are expected to signal broadly steady output, while alternative data are showing robust economic activity.
Official releases due on Monday will show industrial output and retail sales both dipped slightly last month as credit expansion slowed, while the pace of investment remained unchanged, according to economists surveyed by Bloomberg. Proxies such as excavator sales and bank card transactions also point to steady construction and consumer sentiment.
Policy-makers have pledged to cut industrial capacity and excessive borrowing in the world’s second-largest economy, both major tasks that may risk weighing on the expansion. The pace of that easing is gradual for now though, as industries and property developers remain confident, and increasingly-wealthy consumers have become a key stabiliser.
Growth will decelerate in the second half, albeit more moderately than expected before, Zhang Ning, an economist at UBS Group in Hong Kong, wrote in a note. “China’s senior leadership made it clear at their recent Financial Work Conference that its ongoing supervisory tightening bid will not be reversing anytime soon and financial risk containment will remain a top policy priority in the coming years.”
Alternative indicators also remain steady. The earliest indicators, including satellite images, surveys of smaller firms, and sales manager polls, show strong confidence at manufacturers and services businesses alike, while international financial experts were more wary.
Property developers and infrastructure builders appeared unfazed by home purchase curbs and tighter local government financing. Excavator sales, a gauge of investment and construction momentum, more than doubled in July from a muted reading a year earlier. The volume of property sales last month may have dropped from June while increasing from a year earlier, according to a Bloomberg leading index that tracks washing machine output to forecast real estate momentum.
The New Economy Index, a gauge of services output and consumption as a share of the economy, increased to 31.5 in July, signalling more vibrant activity at businesses such as brokers, law firms, software companies, pharmaceutical labs and new-energy car plants. Capital investment rebounded while labour input edged down, according to a report from data miner Business Big Data and a unit of business magazine publisher Caixin Media.
A consumer confidence gauge compiled from data supplied by the nation’s largest bank card network stood at 88.79 in July, rising from a year earlier while edging down from June. Travellers continued to check in at luxury hotels and property purchases held up, as those readings from the nation’s dominant card network rose from a year earlier. Restaurant spending remained lackluster as a long-lasting anti-corruption drive continues to weigh on government-funded banquets.
Online sales eased on seasonal effects, data from JD.com, the nation’s second largest e-commerce platform, show. Office supplies, appliances and jewellery remained robust. Auto sales rose 5.5 per cent from a year earlier last month, industry data show, versus a 4.6 per cent rise the prior month. Box office sales rose to 5.03 billion yuan in July, spurred by the domestic hit film Wolf Warrior 2, according to entertainment researcher EntGroup. — Bloomberg