China’s January Data Gap Vexes Economists
China’s campaign to upgrade its economic data, from plugging leaks to expanding sample sizes, is yet to tackle one gap: the monthlong delay each year in releasing some key January numbers.
Government agencies on Feb. 8 will report slower inflation of 2 percent and faster export growth of 17.4 percent, according to the median estimates of analysts for figures skewed by the timing of a weeklong Lunar New Year holiday. Data for industrial output, retail sales and fixed-asset investment won’t be publicly updated until March.
The wait prevents analysts and investors from fully gauging growth in the world’s second-largest economy following the first acceleration in almost two years last quarter. While it’s not simple to account for the effects of a festival held on different dates each year, that shouldn’t keep the government from releasing data, according to analysts at Royal Bank of Scotland Plc and Mirae Asset Financial Group.
“The statistics bureau could do a better job simply by releasing the January raw data for economists and investors to digest themselves, without any seasonal adjustment,” said Joy Yang, chief Greater China economist at Mirae Asset in Hong Kong and a former International Monetary Fund researcher. “The big issues for China’s data are consistency, transparency, and reliability.”
The People’s Bank of China will also release January lending and money-supply data in the coming days. New yuan loans may have increased to 1 trillion yuan ($160 billion) from 738.1 billion yuan a year earlier, based on the median estimate of 27 economists surveyed by Bloomberg. The five forecasts for the broader aggregate-financing measure, which includes loans and non-bank credit, range from 1.35 trillion yuan to 2 trillion yuan.
The statistics that are released will test investor optimism after the Shanghai Composite Index, the benchmark stock gauge, rose 24 percent since Dec. 3. It gained 0.1 percent today, the eighth straight increase. Surveys published this month showed manufacturing expanded in January while services industries grew at a faster pace.
The National Bureau of Statistics said last year that it combines January and February data under regulations to more easily compare data and “remove the effects brought about by the moving date” of the holiday.
The January data gap isn’t the only aspect of China’s economic figures to be questioned. A reported surge in exports in December was met with skepticism at banks including UBS AG, which said it didn’t match goods movements through ports. Standard Chartered Plc said in October that third-quarter expansion was “too good to be true” when compared with electricity production and a manufacturing index.
The difference in working days makes January figures tough to interpret. The holiday, which starts Feb. 9 this year, fell in January in 2012. Some businesses adjust by, for instance, speeding up production to process orders before the break, said Louis Kuijs, RBS’s chief China economist in Hong Kong.
Nomura Holdings Inc. published a “crib sheet” for estimating January and February data distortions in China and other Asian economies. Hao Hong, managing director for research at the securities unit of Bank of Communications Co., said that “the last thing you want to do is compare this January with last January” in China’s data.
Auto sales this month may fall from January on reduced working days and vendors should watch for a possible rebound in inventories, the China Automobile Dealers Association said yesterday. Members include Pang Da Automobile Trade Co., China’s largest listed car dealer.
The government has taken some steps to improve data. The nation in 2011 jailed one NBS employee and another from the central bank for leaking classified economic figures before the public release. It vowed to publish indicators including inflation and factory output within 24 hours of producing them.
The bureau in 2011 began releasing seasonally-adjusted month-on-month and quarter-on-quarter figures for four indicators after more than two years’ research and preparation. The NBS said its software accounts for the “special nature” of China’s shifting festivals.
Most recently, the NBS said this month it more than tripled the size of its monthly manufacturing survey to 3,000 respondents and is expanding a services index to include about 8,000 companies, up from 1,200.
Among major Asian economies that observe Lunar New Year, China is alone in its practice of delaying publication of some January data by a month. Vietnam and Taiwan, which also have a weeklong holiday, don’t skip any releases, while the partial- week festival in Hong Kong, Singapore or Malaysia doesn’t create such a delay.
“Given the strong seasonal implications and given the technicalities of producing an accurate measure, I think that’s why they may not want to publish it,” said Il Houng Lee, head of the IMF’s Beijing office.
Separately in the region today, Australia retail sales unexpectedly fell for a third month in December, the longest stretch of declines in 13 years.
Across Europe, Poland’s central bank will probably cut its benchmark interest rate a quarter percentage point to 3.75 percent, based on the unanimous forecast of 34 analysts surveyed by Bloomberg. Data may indicate Germany’s factory orders rebounded in December from November, while U.K. house prices probably stagnated in January, surveys showed.
In the U.S., the Mortgage Bankers Association will report on home-loan applications for the week ended Feb. 1.
Releasing China’s data earlier would have its downsides, causing “more confusion and uncertainty” over figures that are “unavoidably” distorted by the holiday, said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.
Kuijs, a former Beijing-based researcher for the World Bank, said that while the current situation is “not optimal,” he’s not expecting to see seasonally-adjusted data for January anytime soon. “It will probably take quite a while,” he said.
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