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The Chinese economy continued to slow in November with car and home sales falling again as the housing market crisis continued.
These are the forecasts from the Bloomberg aggregate index for eight early indicators for this month. While the overall number remained unchanged, there was a further deterioration under the surface in some real-time economic data.
Strong export demand has helped partially offset the housing slump, and the latest shipment figures from South Korea – a leader in global trade – point to another strong month for the sector. However, the pace of increase has slowed and other high-frequency global trade data is also indicating a decline in demand.
Shipping volumes slow before holidays: Bloomberg trade tracker
New export orders from China’s smaller manufacturers jumped in the month, according to a survey of more than 500 companies conducted by Standard Chartered Plc. Export-focused companies in the survey also said they expect faster sales, output and new orders in the next three months.
However, domestic demand was “weak,” according to the survey, with the general conditions index improving slightly while the production gauge remained unchanged.
“Service sector activity has improved, while the performance of the manufacturing sector has declined further,” Standard Chartered economists Hunter Chan and Shuang Ding wrote in a report accompanying the survey.
“The current performance sub-index for manufacturing SMEs fell to a nine-month low as production growth and new orders eased, despite the strong recovery in new export orders,” they said.
Rebar stocks were at their lowest since mid-January this year as construction and steel production continued to slow. While low inventories are usually a good sign for the economy as they indicate strong construction demand, the country’s real estate turmoil in recent weeks has curbed construction activity and caused turmoil in the metals markets.
The central government this week again called on local governments to sell bonds faster and use the money to boost infrastructure investment as a way to support growth. Iron ore prices have risen in recent days amid expectations of a rebound in steel demand and production for the rest of the year, but local governments have struggled to find good projects to spend their money on this year.
So far, the central bank and governments have tight control over any large-scale stimulus or additional spending.
Factory gate inflation showed no signs of abating this month, with the data set tracked by Bloomberg Economics rising to an all-time high, despite government efforts to control rising coal prices.
The official PPI rose in October at the fastest pace since July 1995, and while this boosted earnings for energy producers and some other companies, it cut off other companies’ margins and also led to energy shortages earlier in the year.
Bloomberg Economics generates the overall activity reading by compiling a three-month weighted average of the monthly changes for eight indicators, which are based on business surveys or market prices.
Inside major stocks – CSI 300 Index of A shares listed in Shanghai or Shenzhen (by market close on the 25th of the month).
Total floor area for home sales in four Chinese Tier 1 cities (Beijing, Shanghai, Guangzhou and Shenzhen).
Inventory of steel reinforcement used in building reinforcement (10,000 metric tons). Low inventory is a sign of increased demand.
Copper Prices – spot price of refined copper in the Shanghai market (RMB / metric ton).
South Korea’s Exports – South Korea’s exports in the first 20 days of each month (year-on-year change).
Factory Inflation Tracker – Bloomberg Economics has created a tracker for Chinese producer prices (annual change).
Small and Medium Enterprises Confidence – A survey of companies conducted by Standard Chartered.
Passenger car sales – the monthly result calculated from the average weekly sales data released by the China Passenger Car Association.
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