An indicator of China’s economic outlook rose for a third month in July, adding to evidence the cooling of the nation’s expansion has stabilized.
The leading economic index climbed 0.5 percent to 147.6 in July, The Conference Board’s report showed today. The reading compared with a revised 0.7 percent gain in June and a 0.9 percent increase in May, the New York-based research group said today in a preliminary report on its website.
Premier Wen Jiabao yesterday raised his assessment of the world’s fastest-growing economy in the G20, describing it as being “in good shape” after data showed production last month rose the most in three months and import growth accelerated. Wen said that China’s expansion will help drive a global economic recovery.
July’s increase “signals a continuation of moderate economic growth through year-end,” said Bill Adams, resident economist for The Conference Board China Center in Beijing. “However, strengths among the index’s components have become less widespread in recent months. Growth may become less evenly shared among manufacturing, investment and consumer sectors.”
China, which overtook Japan to become the world’s second-biggest economy in the second quarter, could expand 10 percent this year and 8.5 percent in 2011, Shen Jianguang, a Hong Kong- based economist with Mizuho Securities Asia Ltd., forecast this week. Shen this week raised his third-quarter growth estimate to 9.5 percent from 8.7 percent after August industrial output, retail sales, money supply and new lending beat forecasts.
Wen’s appraisal of the economy yesterday was more upbeat than his June 30 assessment that the economy was “headed in the right direction.” August data suggest domestic demand is withstanding curbs on bank lending and government crackdowns to cool the property market and meet energy and pollution targets.
“Domestic demand is robust and the Chinese economy is heading for a smoother and softer landing than people had feared,” Lu Ting, a Hong Kong-based economist at Bank of America-Merrill Lynch said on Sept. 11.
Still, Wen said yesterday the government will continue measures to curb property speculation and work to maintain stable home prices. China will also push forward its energy-saving and environmental protection efforts and accelerate reform of income distribution, Wen said in a speech to a World Economic Forum meeting in Tianjin.
The Conference Board is still establishing the credibility of the measure, published today for a fifth month. The research group revised most of the figures in the series in July, citing a “technical adjustment,” after earlier correcting the April number because of a calculation error.
The Conference Board’s coincident economic index for China, a measure of current economic activity, increased 0.5 percent in July to 187.3 after gaining an unrevised 1 percent in June.
The six components of the leading index are loans by financial institutions, raw-material supplies, deliveries and new export orders information from the manufacturing purchasing managers’ index, consumer expectations, and total floor space started. The central bank publishes the first two components and the statistics bureau releases the other four.