Service Sector Strength is Back

Non-Manuf. Index Jul-18


July matches January with the highest Index of the last 13-months, which means the service sector in China is back to robust after a weak run through the spring.  Strength in the service sector is compatible with the government plan to move the Chinese economy away from State run enterprises.  Source: Markit Economics

Consumer Prices Flat in May

Consumer Price Index May-18

Consistent with China’s month-to-month, flat inflation rate and with its flat Manufacturer’s Purchasing Index, the Consumer Price Index remained flat in May.  The current number matches the 13-month average and confirms the food price spike in February was a fluke that can be disregarded at this point.  Source: www.; National Bureau of Statistics of China

Ups and Downs Result in Balance

Manufacturer's Index - May-18


On the upside May saw growth in output and new orders, which contrasts to a decline in employment to lower costs that caused an increase in outstanding workloads. At the same time an increase in input costs and output charges increased inflationary pressure.  Still, the 12-month outlook is said to have improved.

Zhengsheng Zhong, analyst at CEBM Group, a subsidiary of Caixin, commented, “Overall, operating conditions across the manufacturing sector remained stable.  The growth in the price of industrial products has gained momentum, however, the export situation was still disappointing.”  Source: Markit Economics

China Inflation: May Same as April

Inflation Rate - may-18

China’s inflation rate flattened out in May, remaining at 1.8 percent.  That matches April’s number and the average for the last twelve months. And it sits in contrast to the 3% rate the government had targeted for the year.  Internal numbers show that food prices increased a mere 0.1% while non-food prices increased 2.2 percent.  Source: Trading Economics; National Bureau of Statistics, China

China = Mobile

Carrier Data - May 2018

May 2018 produced almost nine million new mobile subscribers continuing China’s endless upward trend and emphasizing another cultural difference between China and the rest of the world.  In China the desktop is secondary to the mobile device.  Most of life in China is done on a phone. Sources: China Mobile, China Unicom, China Telecom

Home Building in China Defies Bubble

Home Prices - China

Of the 70 cities in which home prices are tracked by China’s government, 61 of them saw home prices increase in May.  That’s up from 58 in April.  Together with these price increases and a rise in permits for new building in tier three and four cities, suggest that the speculation in housing has not been curbed as the government had hoped.

Wei Yao, chief China economist at Societe Generale SA in Paris, commented that the real estate market in China remains “surprisingly resilient.”   Source:

Chinese Consumers See a Positive Buying Environment

China Consumer


April marked the seventh consecutive month with the Consumer Confidence Index in the 120s. Impressive. Though the Index may go up and down from one month to the next, Chinese consumers have been showing a strong, consistent belief in their economy, the likes of which hasn’t been seen since we have been tracking these data – that goes back to January 2015. May the buying mood continue.  Sources:; Nat’l Bureau of Statistics, China

Inflation Rate Steadies Lower

China Inflation- April-18

April’s inflation rate of 1.8 puts to rest the spike seen in February.  That was explained as the result of sharp price increases in food.  The drop from March to April is explained as a result of a “sharp slowdown in food inflation.”  There has been no explanation as to why food price spiked in the frist place, but now that things have settled down, that issue will be left behind. Source: Trading Economics; National Bureau of Statistics, China

Retail Growth Increases Slowed in April 2018

China Retail Sales - April-18

Retail sales in China grow every month.  The question is: How much?  In April it grew 0.66%, which is the second lowest growth rate in the 13-month period and significantly below the 0.73% 13-month average.  That said, April’s growth is very positive and it continues to support the notion that modern Chinese consumers are doing what they have learned to do best; consume.  Source: www.; National Bureau of Statistics of China

Consumer Prices Decline Again

Consumer PriceIndex - april-18

Inflationary pressure has reduced again with a second month of consumer price declines. This decline represents another return to price norms we had seen for the ten months prior to February’s spike. This should feed positive feelings into future consumer sentiment numbers as the near-term Chinese economy continues to roll along. Source: www.; National Bureau of Statistics of China