I put some important September data charts into a chartbook that can be saved and printed.
- The latest October PMI data in a nutshell: On balance the PMI numbers point to a modest improvement in the economic outlook. Manufacturing PMI was unchanged and remains below 50 at 49.8. The Service PMI was modestly lower than last month but remains well in expansion territory at 53.1. Both manufacturing and service PMI new orders improved and both are above 50, indicating new order expansions. Large firms (51.1) fared better than small firms (46.6) as large SOEs and heavy industries benefit from the increase in bank lending due to rate cuts. See the data here : PMI
Housing prices continued to surge in September, adding to the rapid sales and surge in new housing starts. See a map of house price changes here: http://laohueconomics.com/china-city-monthly-property-price-change
The PBOC cut both the reserve requirement a full 0.50% and the one-year deposit rate by 0.25%. The bank deposit rate benchmark now sits below inflation at 1.5%. The reserve cut will potentially unleash $80 billion of credit into the economy. A cut so late in the year will most likely spread to broad growth in early 2016. Easing measures over the last year have been unable to meaningfully boost credit growth and investment. Along with the rate cuts came the final piece of rate liberalization: removal of the deposit rate ceiling. As of Friday, in theory all Chinese rates can be set by the market. See my post here: Important reforms accompany PBOC easing
Q3 GDP rose 6.9% from the previous year, modestly better than expectations, with services strong and the industrial sector still running lower than overall growth. If we strip out the transient boost from the financial sector, underlying official GDP growth was more like 6.4% or so. The economy is more stable than many thought post-stock market turmoil. Restructuring is unfolding as consumption accelerates and services remain resilient.
All Charts have been updated for September data.
- There is a lot of worry about China's official GDP data. Here is my take: Should We Believe China's GDP Data?
- China will probably cut the 2016 growth target by another 0.50%. This may add to growth worries as speculation of a target reduction increases this Fall. See 3 reasons why China could lower the 2016 growth target to 6.5% and what it means going forward for more details.
Here is an update on the one-child policy change:
My views on official GDP data reliability:
update on CHina's commodity demand:
Comments on the continued use of the "Li Keqiang Index":
Comments on china's consumption