Chinese Consumer Fail to Get the Message

In spite of surveys that measure consumer sentiment directly, probably the single best way to track consumer sentiment is by watching the growth of retail sales.  If consumers are buying, they are confident.  And the Chinese consumer have been buying through the winter noise about trade wars and its assumed negative effect on the Chinese economy.  They apparently have not gotten the message.  Source: www.; National Bureau of Statistics of China

China’s Manufacturing Makes a Comeback

Last year’s Manufacturing Index ended in decline, which rolled into January.  The last two months have reversed the decline to a point where March turns in the best number since July of last year.  Every time a sector of the Chinese economy is counted out, it seems to recover in relatively short order.  This comeback was fueled by growth in new orders – mostly exports. They were strong enough to overcome slight declines in purchasing activity, finished goods inventory and slight increases in input costs.

According to Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin manufacturer’s are seeing a positive future, “Overall, with a more relaxed financing environment, government efforts to bail out the private sector and positive progress in Sino-U.S. trade talks, the situation across the manufacturing sector recovered in March.”   Source: China Caixin,CNBC

Smart Subscribers Pass 1.3 Billion in China

February saw a 38% drop in the number of new mobilesubscriptions compared to January.  One explanation might be the widely reported drop in China’s iPhone sales, though it was also reported that local brands have taken up much of the slack.  Apple may not have merely lost a month, it could be a long term loss of market position.  Meanwhile, the number of smart subscriptions moved passed the 1.3 billion mark, emphatically emphasizing China’s status as the largest mobile market in the world.  Sources: China Mobile, China Unicom, China Telecom

China’s Service Sector Declines Modestly

February’s service sector declined modestly while maintaining a solid underpinning for the Chinese economy.  It sits just below the 13-.month average of 52.9.  Though the manufacturing sector has shown weakness the service sector remains comfortably on the positive side of this scale. Projected GDP reflects this modest downturn.  Source: China Caixin

Manufacturing Rebound

In a lesson on why one cannot generalize from one data point, we note the strong rebound in the Purchasing Manager’s Index for February after a dismal January.  Given the talk about declining Chinese growth resulting from the trade wars, it was natural that the steep PMI drop in January would be viewed as more than it appears to have been.  We’ll have to watch next month’s number for for a pattern.  Was January an anomaly? Or was it the beginning of a volatile period?  Source: China Caixin

China’s Un-Phased Consumer

In retrospect, one can explain the reason Chinese consumers have shown revatively little reaction to existing trade issues or the decrease in local manufacturing.  It is the steady decline of consumer prices over the last three months.  As far as the man-on-the-street is concerned, life has gotten modestly easier through that period.  January’s prices were the lowest since January of last year.  Source: www.; National Bureau of Statistics of China

China’s Inflation Rate Declines for the Third Month

Though consumer prices in China went up 0.5% in January, overall inflation continued a three month decline.  Inflation rates haven’t been this low since January of last year.  This may be a partial explanation as to why Chinese consumers remain positive in spite of real contraction in the manufacturing sector.  The downward pressure represents a form of stability that, due to trade tensions, may not be reflected in other parts of the economy. Source: Trading Economics; National Bureau of Statistics, China

China is Approaches 1.3 Billion Smartphone Subscribers

The big smartphone news from last month was that Apple’s phone sales in China had crashed in the last quarter.  But that didn’t mean that smartphone sales in China had turned negative. The carrier numbers from January imply that Chinese manufacturers have replaced Apple sales and then some.  Smartphone subscribers in China hit 11.3 million in January, which is a half million above the 12-month average for last year.  Sources: China Mobile, China Unicom, China Telecom

Chinese Manufacturer’s Bail Out in January

The precipitous -3.8% drop compared to November’s number is the largest decline we have seen since we’ve been watching and the lowest this Index has fallen since February of 2016.  Obviously, the trade wars have taken hold and are now affecting the judgment of purchasers in the manufacturing sector.  Index numbers below 50 are on the negative side for futures.  Notably, the January number for the Services sector, as reported last week, remianed at a healthy 53.3. Source: Markit Economics

China’s Economy is Down, but Not Out

The pattern through 2018 is now clear.  The Chinese GDP has declined 5.9% when compared to the fourth quarter of 2017.  Still it is an economy that is growing at a healthy rate in spite of the effects brought on by the trade turbulence. Sources: Trading Economics; National Bureau of Statistics, China