Earliest China Data Indicate Economy Remaining Stable This MonthBloomberg News
‘Readings reflect greater confidence,’ Standard Chartered says
Gauge of consumer services sales growth rose to 21-month high
China’s economy remained generally steady during the Lunar New Year while sentiment readings show uncertainties over the outlook, according to the earliest private data for February.
Sales managers perked up and satellite data showed activity hanging in near a five-year high. Meanwhile, the financial world’s outlook for next 12 months remained in negative territory and a gloomier mood settled in over the steel sector.
The world’s No. 2 economy has picked up in recent months as trade improves, producer prices continue to rebound and manufacturers remain upbeat. That gives policy makers more breathing room as they work to contain a credit boom that’s fueled the resurgence.
It may be too early to tell where the economy is going this year from the February data, as statistics in the first two months are usually distorted by the Lunar New Year, when hundreds of millions of people travel home and factories shut for days or weeks. This year, the holiday straddled the last week of January and the first week of February.
Here’s what the earliest indicators show:
The economic outlook has improved slightly in February while expectations for the coming year lingered well below the long-term average, according to the China Economic Panel, a joint project of The Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai.
The panel surveys international financial market experts on their assessment of China’s economy. The readings, 4.3 for the current situation and minus 4.2 for the future outlook, are balances of percentage of positive answers minus percentage of negative answers.
The China Satellite Manufacturing Index edged down to 51.1 this month from a five-year high of 52 in January, according to San Francisco-based SpaceKnow Inc., which uses commercial satellite imagery to monitor activity across thousands of industrial sites. Like the official manufacturing purchasing managers index, readings above 50 indicate improving conditions.
Standard Chartered Plc’s Small and Medium Enterprise Confidence Index rebounded to 56.3 this month from 55 in January. While current activity weakened amid seasonal disruptions from the holidays, the sub-index tracking expectations for the next three months improved.
“The outlook readings reflect greater confidence in a near-term recovery,” economists Shen Lan and Ding Shuang at the bank wrote in a report. Corporate expectations for yuan depreciation “became more balanced” with fewer expecting a sharp drop, they wrote.
A survey-based gauge of sales manager sentiment from World Economics Ltd. picked up to 51.8 in February from 51.4 in January. A gauge for consumer services sales growth rose to a 21-month high.
"Improving sentiment is being vindicated by solid sales and market growth," the London-based firm wrote in a note. "The jobs market appears stable with little change reported month-on-month."
The S&P Global Platts China Steel Sentiment Index slumped to 25.21 this month from 34.13 in January. The gauge is based on a survey of about 75 to 90 China-based market participants including traders and steel mills.
“The outlook is much more bearish than the current steel and iron ore price spike would suggest," Paul Bartholomew, a senior managing editor at S&P Global Platts in Melbourne, wrote in an e-mail. The data are affected by the Lunar New Year, he said in the report.
— With assistance by Xiaoqing Pi