Modest PMI Decline

Manufacturing Index - Nov 2017

 

Tepid new orders, domestic and export, have led to a marginal decline in the Manufacturing Purchasing Manager Index.  Notable is a sizable increase in input costs and a corresponding increase in selling prices.

Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin stated, “For the most part, the manufacturing sector remained stable in November, although some signs of weakness emerged. In Q4, the economy is likely to maintain the stability observed since the start of the second half of the year. Economic growth in 2017 is expected to be higher than last year, but it may come under downward pressure in 2018.”   Source: Markit Economics

Chinese Consumer Confidence up a record 4.28%

Consumer Confidence - Oct 2017

 

The month-over-month increase in Chinese consumer confidence is highest since we have been watching it starting in January 2015.  And it follows a positive monthly gain that was the fourth largest in that period.  Together there have been five consecutive positive months. The current measure sits well above the 13-month average of 112.9.  Chinese consumer exuberance seems to know no bounds, which is good for marketers.  Sources: Tradingeconomics.com; Nat’l Bureau of Statistics, China

Retail Sales in China Continues to Increase

China Retail Sales Oct-17

 

Earlier this week we saw that consumer prices were stable, which implied that consumer buying would continue unfettered. Now we report that China’s Retail Sales Growth has maintained its relentless climb for yet another month. We anticipate a slight bump when November numbers are available because of Single’s Day – the equivalent of Black Friday in the US – which occurs in the second week of the month. Sources: Trading Economics; National Bureau of Statistics of China

China’s Consumer Prices Tick Up Modestly

Consumer Prices Oct-17

 

 

Since the February low point for this 13-month period, prices have slowly worked their way back to approximately where they were last year at this time. Still the movements in either direction over this period have not been that extreme. To put it in perspective, China’s Consumer Price Index reached its highest at 128.4 in February 1989 and its lowest at 97.8 in April of 1999. Steady prices are a good thing for consumers because they engender a level of certainty in their lives, which keeps them buying – good for us.  Sources: Trading Economics; National Bureau of Statistics of China

Outlook Flat

China Leading Economic Index -Sep-17

 

To project the economic future of the Chinese economy a group of eight indicators that represent a broad range of sectors are combined. The pattern for the last four months has been relatively flat with only a 0.2% variance from highest to lowest.  September’s move up to zero from -0.1% is better than moving the other way, but not all that significant, which leads to the conclusion that the outlook is flat. Source: Trading Economics; National Bureau of Statistics, China

Run Rate of Smart Phone Subscriptions at 31% of 2016

Carrieer Data - Oct 2017

Replacement of early generation feature and smart phones continues unabated in China.  Almost ten million new 3G/4G subscriptions were initiated in October of 2017 across the three major carriers. The average monthly year-to-date growth has been around 7 million as compared to the average of 22.5 million for first 10-months of 2016.  It is clear that the upgrading continues, but at one third the rate of last year.  Sources: China Mobile, China Unicom, China Telecom

Inflation Up, but Not Concerning

Inflation Rate 0ct-17

 

October’s inflation rate for the Chinese economy rose to its highest level since January driven by increased costs for non-food items, consumer goods and services. A small decline in food prices was the only major sector buffering against an even higher increase.  Underlying the increase is a producer price index that rose by 6.9 percent compared to October 2016. The effect of this on Chinese consumers is all that matters. This modest inflation rate should allow consumers to continue their robust buying spree. Source: Trading Economics; National Bureau of Statistics, China

October’s Mini-Recovery

Services Activity-Oct-17

 

September’s mini crash is October’s gain.  Seeing September’s 4% drop compared to August was concerning only if October had continued the downward movement. But October’s rebound suggests that September was an anomaly.  Even if you were unable follow that roundabout timeline, the message is you can relax in the knowledge that there is no service sector meltdown, which is important to China’s evolving economy.  The index has turned in the correct direction though it remains below the 13-month average of 52.2.  Source: Markit Economics

Holding Steady

Manufacturing PMI-Oct-17

 

While new orders, new export orders and buying activity all increased, they appear to be balanced by increased costs resulting from government imposed environmental requirements and marginally lower inventories.

Looking at the future, Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group noted, “The stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries, which could have a negative impact on production in the coming months.”  Source: Markit Economics

China’s GDP Ticks Down in Q3

China GDP - Q317

 

China’s Gross Domestic Product for the third quarter of 2017 ticked down slightly because fixed-asset investment grew less than expected. Other indicators such as industrial output and retail sales continued to deliver robust increases.  Sources: Trading Economics; National Bureau of Statistics, China