21 Mar 2014
Data supports view of Chinese economy slowing - Rabobank
FXStreet (Bali) - Michael Every, Head of Financial Markets Research, Asia Pacific, at Rabobank, provides some data from across the Chinese economy supporting the bank's view that output is slowing.
Key Quotes
"Official PMI surveys are showing a worrying trend lower (see Chart 3). Manufacturing is only just holding above the key expansion/contraction 50 level, while services – despite a surprise tick higher in February – also look to be on a similar downward channel overall. (Notably, the unofficial HSBC/Markit PMI series, which surveys more small firms, is even more pessimistic)."
"Fixed asset investment - which has doggedly refused to slow until now - also appears to finally be decelerating (see Chart 4). Year-to-date growth slowed to “only” 17.9% in February, but that was the lowest reading since the end of 2002. That implies a sharp drop-off in investment in the first quarter of 2014. Property price inflation is also cooling in tandem by some measures."
"Retail sales growth slowed to 11.8% YoY in the year to February, which was the lowest reading since April 2004 (see Chart 5): that is important as the government’s aim (and the market’s deep hope) is that China can make a smooth transition towards a consumer-driven economy ahead."
"Export growth plunged 18.1% YoY in February. Even assuming this reflects the unwinding of invoice padding linked to illicit capital inflows into China from Hong Kong, the 12-month average growth of exports continues to grind lower and now stands at just 4.4% YoY , hardly
encouraging (see Chart 6)."
Key Quotes
"Official PMI surveys are showing a worrying trend lower (see Chart 3). Manufacturing is only just holding above the key expansion/contraction 50 level, while services – despite a surprise tick higher in February – also look to be on a similar downward channel overall. (Notably, the unofficial HSBC/Markit PMI series, which surveys more small firms, is even more pessimistic)."
"Fixed asset investment - which has doggedly refused to slow until now - also appears to finally be decelerating (see Chart 4). Year-to-date growth slowed to “only” 17.9% in February, but that was the lowest reading since the end of 2002. That implies a sharp drop-off in investment in the first quarter of 2014. Property price inflation is also cooling in tandem by some measures."
"Retail sales growth slowed to 11.8% YoY in the year to February, which was the lowest reading since April 2004 (see Chart 5): that is important as the government’s aim (and the market’s deep hope) is that China can make a smooth transition towards a consumer-driven economy ahead."
"Export growth plunged 18.1% YoY in February. Even assuming this reflects the unwinding of invoice padding linked to illicit capital inflows into China from Hong Kong, the 12-month average growth of exports continues to grind lower and now stands at just 4.4% YoY , hardly
encouraging (see Chart 6)."