China Data Dump and Alternative Gauges Both Signal Steady OutputBloomberg News
Economists forecast moderation in factory output, retail sales
Big data point to solid construction and consumer confidence
China’s next batch of official indicators are expected to signal broadly steady output, while alternative data are showing robust economic activity.
Official releases due Monday will show industrial output and retail sales both dipped slightly last month as credit expansion slowed, while the pace of investment remained unchanged, according to economists surveyed by Bloomberg. Proxies such as excavator sales and bank card transactions also point to steady construction and consumer sentiment.
Policy makers have pledged to cut industrial capacity and excessive borrowing in the world’s second-largest economy, both major tasks that may risk weighing on the expansion. The pace of that easing is gradual for now though, as industries and property developers remain confident, and increasingly-wealthy consumers have become a key stabilizer.
Growth will decelerate in the second half, albeit more moderately than expected before, Zhang Ning, an economist at UBS Group AG in Hong Kong, wrote in a note. "China’s senior leadership made it clear at their recent Financial Work Conference that its ongoing supervisory tightening bid will not be reversing anytime soon and financial risk containment will remain a top policy priority in the coming years."
Here’s what Monday’s data will show, according to those surveyed:
- Industrial output rose 7.1 percent from a year earlier, versus 7.6 percent in June
- Retail sales expansion from a year earlier edged down to 10.8 percent from 11 percent
- Fixed-asset investment in urban areas rose 8.6 percent from a year earlier in the first seven months, unchanged from the pace in the first six months
- A separate report, typically released mid-month, will show aggregate financing, a broad gauge of new credit, fell to 1 trillion yuan ($150 billion) from 1.78 trillion yuan in June
Alternative indicators also remain steady. The earliest indicators, including satellite images, surveys of smaller firms, and sales manager polls, show strong confidence at manufacturers and services businesses alike, while international financial experts were more wary.
Property developers and infrastructure builders appeared unfazed by home purchase curbs and tighter local government financing. Excavator sales, a gauge of investment and construction momentum, more than doubled in July from a muted reading a year earlier.
The volume of property sales last month may have dropped from June while increasing from a year earlier, according to a Bloomberg leading index that tracks washing machine output to forecast real estate momentum.
The New Economy Index, a gauge of services output and consumption as a share of the economy, increased to 31.5 in July, signaling more vibrant activity at businesses such as brokers, law firms, software companies, pharmaceutical labs and new-energy car plants. Capital investment rebounded while labor input edged down, according to a report from data miner Business Big Data and a unit of business magazine publisher Caixin Media Co.
A consumer confidence gauge compiled from data supplied by the nation’s largest bank card network stood at 88.79 in July, rising from a year earlier while edging down from June.
Travelers continued to check in at luxury hotels and property purchases held up, as those readings from the nation’s dominant card network rose from a year earlier. Restaurant spending remained lackluster as a long-lasting anti-corruption drive continues to weigh on government-funded banquets.
Online sales eased on seasonal effects, data from JD.com Inc., the nation’s second largest e-commerce platform, show. Office supplies, appliances and jewelry remained robust.
Auto sales rose 5.5 percent from a year earlier last month, industry data show, versus a 4.6 percent rise the prior month. Box office sales rose to 5.03 billion yuan in July, spurred by the domestic hit film “Wolf Warrior 2,” according to entertainment researcher EntGroup.
— With assistance by Xiaoqing Pi, and Ailing Tan